Sample Category Title

During Wednesday's morning hours, the currency exchange rate passed through the support level of the weekly S1 at 1.1394 to be located at the 1.1393 mark.

In regards to the near-term future, most likely, the rate will trade sideways at the 1.3800 level for the rest of the trading session. Meanwhile, the 55-hour simple moving average aims to catch up the rate to resist the rate in the next day or two.

However, the European Single Currency could appreciate against the US Dollar to break the resistance of the weekly S1 at 1.1394 to push the rate to the 1.1400 level.

Notes/Observations

• Germany Dec Factory Orders continues the string of disappointing European data
• RBA turned dovish as its tweaked its forward guidance to broadly balanced (previously saw the next rate move as likely higher)

Asia:

• BoJ Gov Kuroda: Economy has improved significantly since 2013; reiterates inflation to gradually accelerate to 2%
• Japan PM Abe: Recognize BoJ yet to meet [2%] price target but what is important is job growth
• RBA Gov Lowe Year Ahead speech noted that the interest rate outlook was more evenly balanced. Expected 2018 GDP a little below 3.0% but noted of large number of uncertainties, including supply of credit

Europe:

• UK Ministers said to be considering a plan that would delay Brexit to May 24th from the currently planned March 29th
• Brexit ministers looking at a plan that would keep Ireland border open. Ensured there was no need for any physical checks on the border or hard infrastructure. Instead, a tracking system monitors vehicles on designated routes as they cross from Northern Ireland to the Republic via GPS as well as number plate recognition cameras.
• ECB officials said to see no urgent need to offer new long term loans to banks. Not certain to announce any new TLTRO program at the next policy meeting in March; concerned that offering the loans could fuel perceptions that they're helping out particular lenders

Americas:

• President Trump State of Union Address (SOTU) reiterates appeal that both political parties unite for infrastructure plan. Reiterated that Americans pay too much for prescription drugs; wanted health insurance companies and drug companies to disclose real prices. Stressed that had a moral duty to create an immigration system that protected the lives and jobs of our citizens; called for more troops to be deployed at southern border. Reiterated pledge to build the border wall (Note: Trump did NOT declare a national emergency in speech) and confirmed he'll meet with North Korea leader Kim in Vietnam between Feb 27-28th - Fed's Kaplan (dove, non-voter): Economic financial uncertainties merit close watching; Highly appropriate to consider changes in balance sheet, still weighing right path for Fed balance sheet - Fed announced revisions to 2019 bank stress tests in which the sSeverely adverse unemployment test went to 10%

Energy:

• (US) Weekly API Oil Inventories: Crude: +2.5M v +2.1M prior

Macro

• (AU) Australia: RBA Governor Lowe sparked a sell-off in AUD after seemingly dialing-back his post-policy meeting statement from yesterday, which had disappointed markets by failing to follow the Fed's dovish turn. During the speech Lowe corrected this by stating that "over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today, the probabilities appear to be more evenly balanced."
• (DE) Germany: December factory orders fell -1.6% m/m thanks to a drop in export orders. The three month rate though still posted a rise of 0.3% q/q in Q4, a marked improvement from the -1.0% q/q in Q3. The trend in capital goods orders has been very strong, while intermediate goods as well as consumer goods orders fell in Q4.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.04% at 365.14, FTSE -0.20% at 7,163.09, DAX -0.34% at 11,329.99, CAC-40 -0.16% at 5,075.44, IBEX-35 % at #, FTSE MIB +0.55% at 19,943.50, SMI -0.11% at 9,145.50, S&P 500 Futures -0.16%]
• Market Focal Points/Key Themes: European Indices trade slightly lower across the board consolidating after sharp gains seen yesterday with earnings the key theme. Notably shares of car giant Daimler trades lower after a sharp drop in profits and dividend cut. On the banking front Dutch name ING trades higher after a top and bottom line beat, with BNP Paribas little changed after earnings. Other notable earners include Dassault Systems, Carlsberg, Barrett Development, CYBG which all trade higher on positive earnings while Tomtom, Equinor Melexis and Swedish Bank Handelsbanken all trading lower on earnings. Elsewhere Interserve trades sharply higher following an update on its deleveraging plan, while the EU did confirm they are to reject the Alstom-Siemens deal. Overnight in the US shares of Disney ticked higher on earnings; Shutterfly dropped sharply after earnings missed forecasts and the stepping down of its CEO while Electronic Arts trades 15% lower after a big miss on earnings and Rev. Looking ahead notable earners include General Motors, Eli Lily, Humana and Cummins among others.

Equities

• Consumer discretionary: Delivery Hero [DHER.DE] +4.5% (earnings), Ocado Group [OCDO.UK] -9% (continued incident)
• Energy: Equinor [EQNR.NO] -2% (earnings; capital markets update), Uniper [UN01.DE] +1.5% (CEO and CFO to step down)
• Financials: BNP Paribas [BNP.FR] -2% (earnings; CIB transformation), Credit Suisse [CSGN.CH] -1% (tax warning), Nordea Bank [NDA.SE] -1% (earnings), ING Groep [INGA.NL] +4% (earnings), Munich Re [MUV2.DE] +2%
• Industrials: Daimler [DAI.DE] -2.5% (earnings; post earnings comments), Barratt Developments [BDEV.UK] +2.5% (earnings), Dassault Systems [DSY.FR] +8% (earnings), Victrex [VCT.UK] -3% (trading update), Metso [METSO.FI] +7.5% (earnings), Norwegian Air [NAS.NO] +6% (load factor)
• Technology: Melexis [MELE.BE] -11% (earnings)

Speakers

• Iceland Central Bank (Sedlabanki) Policy Statement saw inflation picking up pace in 2019 and remaining above target until H2 2020; It could call for tighter monetary stance in coming months but added that the near-term stance to depend on interaction between narrower output gap, wage-setting decisions and developments in inflation. Reiterated stance that has both the will and necessary tools to keep inflation and inflationary expectations at target over the long term. Saw GDP growth slowing markedly in 2019 citing slowdown in tourism and forecasted GDP at 1.8% (compares to 4.45 pace in 2018)
• Turkey Fin Min Albayrak: Considering a 30-year eurobond issuance
• Ukraine Central Bank Dep Gov Churiy: To cut obligatory FX revenue sale to 30%; effective Mar 1st
• Thailand Central Bank Policy Statement noted that the decision to keep policy steady was not unanimous (4-2). It reiterated its stance that current rate was appropriate for the domestic economy and the economy continued to gain traction. Still needed to monitor the financial sector risk. THB currency (Baht) was moving in-line with regional peers

Currencies/Fixed Income

• EUR/USD was softer by 0.2% and holding below the 1.14 level. Germany Dec Factory Orders continued the string of disappointing European data.
• AUD/USD was on track for its biggest decline in about a year after the RBA Gov Lowe tweaked the forward rate guidance to a more dovish stance. RBA now saw the rate outlook as more evenly balanced compared to the prior view that next rate move was likely to be higher.

Economic Data

• (DE) Germany Dec Factory Orders M/M: -1.6% v +0.3%e; Y/Y: -7.0% v -6.7%e
• (TH) Thailand Central Bank (BoT) left Benchmark Interest Rate unchanged at 1.75% (as expected)
• (CZ) Czech Dec National Trade Balance (CZK): 0.0B v -5.5Be
• (CZ) Czech Dec Industrial Output Y/Y: -1.4% v 0.0%e; Construction Output Y/Y: 3.9% v 0.0% prior
• (DE) Germany Jan Construction PMI: 50.7 v 53.3 prior
• (IS) Iceland Central Bank (Sedlabanki) left the 7-Day Term Deposit Rate at 4.50%
• (IS) Iceland Jan Preliminary Trade Balance (ISK): +4.6B v -11.0B prior
• (ZA) South Africa Jan SACCI Business Confidence: 95.1 v 95.2 prior

Fixed Income Issuance

• (IT) Italy Debt Agency (Tesoro) opened its book to sell 30-year BTP bond via syndicate; guidance seen +20-22bps
• (IN) India sold total INR100B vs. INR100B indicated in 3-month, 6-month and 12-month bills
• (ID) Indonesia sold total IDR10.12T vs. IDR8.0T target in 6-month, Islamic Bills; 2-year, 4-year, 15-year and 30-year bonds
• (DK) Denmark sold total DKK2.86B in 2020 and 2029 DGB bonds
• (SE) Sweden sold SEK5.0B in 3-month Bills; Avg Yield: -0.4559% v -0.4652% prior; Bid-to-cover: 3.04x v 2.08x prior

Looking Ahead

• (SE) Sweden Debt Agency chief Olofsson
• 05:30 (GR) Greece Debt Agency (PDMA) to sell €625M in 13-Week Bills; Avg Yield: % v 0.67% prior; Bid-to-cover: x v 1.83x prior
• 06:00 (PT) Portugal Q4 Unemployment Rate: No est v 6.7% prior
• 06:00 (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 1.50%
• 06:00 (RU) Russia to sell RUB35B in 2026 and 2034 OFZ bonds
• 07:00 (US) MBA Mortgage Applications w/e Feb st: No est v -3.0% prior
• 07:00 (UK) Weekly PM May question time in House of Commons
• 07:00 (FI) Finland Govt responds to Opposition party No-Confidence Motion
• 08:00 (UK) Baltic Dry Bulk Index
• 08:20 (BR) Brazil Jan Vehicle Production: No est v 177.7K prior; Vehicle Sales: 234.5K prior; Vehicle Exports: No est v 31.7K prioir
• 08:30 (US) Nov Trade Balance: -$54.0Be v -$55.5B prior
• 08:30 (US) Q4 Preliminary Nonfarm Productivity 1.7%e v 2.3% prior; Unit Labor Costs: 1.7%e v 0.9% prior
• 08:30 (CA) Canada Dec Building Permits M/M: -1.0%e v +2.6% prior
• 08:35 (CA) Bank of Canada (BOC) Dep Gov Lane
• 09:00 (MX) Mexico Jan Consumer Confidence Index: 104.4e v 108.6 prior
• 09:00 (MX) Mexico Jan Vehicle Domestic Sales: No est v 142.0K prior
• 09:30 (NZ) Fonterra Global Dairy Trade Auction
• 10:00 (CA) Canada Jan Ivey Purchasing Managers Index (Seasonally Adj): No est v 59.7 prior; PMI (unadj): No est v 48.2 prior
• 10:00 (MX) Mexico weekly International Reserves data
• 10:00 (PL) Poland Central Bank Gov Glapinski to hold post rate decision press conference
• 10:30 (US) Weekly DOE Crude Oil Inventories
• 11:30 (US) Treasury to sell $50B in 18-day CMB
• 13:00 (US) Treasury to sell $27B in 10-Year Notes Reopening
• 15:20 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to leaves Selic Target Rate unchanged at 6.50%

The pair eases on Wednesday after the third straight failure at 110 zone, as traders took some profits on fears that bulls may stall her again. Dip was so far contained by initial 10SMA support (109.46) but could extend as momentum continues to weaken on daily chart and approaches negative territory and slow stochastic is reversing from overbought zone. Loss of 10SMA support would risk test of converged 20/30SMA's 109.25, violation of which would push the price in the lower side of larger 108.49/110.16 range (confirmed by double weekly Doji candle). Clearer direction signal could be expected on break of either boundary of the range.

Res: 110.16, 110.22, 110.91, 111.25
Sup: 109.46, 109.25, 108.72, 108.49

After rising as much as 1% yesterday, the Australian dollar tumbled to 0.7125 against the greenback on Wednesday morning after an unexpected dovish switch from the central bank. On Monday, Reserve Bank of Australia Governor Philip Lowe avoided guidance to market participants, especially regarding the interest rate outlook. Investors believed that they could expect the RBA to move slowly toward tightening, if inflation and economic conditions allowed it. However, the next day Governor Lowe gave a speech in Sydney in which he adopted a more cautious stance.

Even though Australian economic growth is expected to remain reasonable, “downside risks have increased”. Accordingly, RBA’s growth forecast has been revised to the downside. The biggest change concerns monetary policy. Governor Lowe declared that “Over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today, the probabilities appear to be more evenly balanced”. This was a game changer for investors as it clearly suggests that the RBA would cut rates if needed. In our opinion, the RBA wants to keep some room for manoeuvre, in case the Chinese slowdown proves to be more acute. More than 38% of Australia’s exports go to China. We expect the Aussie to remain under pressure until at least the end of the Sino-USA trade conflict.

Yen in recovery

Inflation outlook cuts by the Bank of Japan for 2019 don’t seem to bother investors, who are favouring JPY as a safe haven currency, after US President Trump’s State of the Union address that didn’t provide any news on trade talks with China. It seems that US authorities are willing to enforce their right of extradition of Huawei CFO Meng Wanzhou and are willing to introduce sanctions for national security reasons against China-based telecom equipment supplier ZTE for suspicion of espionage, bad news for trade truce. There are probably good reasons for such a posture, as shown by Trump’s insistence on the need to invest in “cutting-edge industries of the future”, including AI and 5G wireless networks, China has become a major competitor in technology development.

Headlines do not bode well for US–China round two trade talks next week in Beijing, led by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, where topics including intellectual property protection and structural reforms (market access and subsidies) are going to be discussed. A deadline of 2 March 2019 for finding a deal has officially been announced by Trump. The recent rise in JPY suggests that investors’ optimism is not growing, although the Japanese economy is not safe from Trump’s “America first” policy. Trump’s recent mention to Congress that it should pass the Reciprocal Tariff Act shows that the EU and Japan, US allies, could also become targets looking forward. Currently trading at 109.66, USD/JPY is heading along 109.40 short-term.

Bears found footstep at 1.2925, just above key support at 1.2904 (100SMA / Fibo 38.2% of 1.2397/1.3217), after four-day fall which accelerated on Tuesday, on strong bearish signal on break below 200SMA).

Pullback from 1.3217 (25 Jan high) is taking a breather ahead of strong support, as slow stochastic turned sideways in deep oversold territory.

The current action could be seen as positioning for fresh weakness as momentum enters negative territory and daily 5/10/20 SMA’s turned to bearish setup and 5/200SMA’s formed death-cross.

Broken 20SMA offers immediate resistance at 1.2984, which should ideally cap consolidation, but stronger upticks cannot be ruled out.

Broken 200SMA (1.3036) is expected to limit extended corrective upticks and keep bears intact.

Eventual break below 1.2904pivot would risk extension towards 1.2807/05 (50% retracement / 55SMA).

Only return and close above 200SMA would sideline bears and signal higher base at 1.2925.

Res: 1.2984,1.3000,1.3024,1.3036
Sup: 1.2925,1.2904,1.2887,1.2807

The US dollar strengthened against a basket of major currencies during yesterday's trading session. The dollar index (#DX) closed in the positive zone (+0.26%). Financial market participants assess the speech by the US President Donald Trump. The President pointed out that the priorities for this year are to resolve the issue of illegal migration and the construction of a wall on the border with Mexico. Donald Trump also noted that if an agreement was reached with China, then it should change the structure of countries' relations in order to stop dishonest trade practices, as well as protect American jobs.

Among other issues, economic data from the Eurozone, the UK and the US were published yesterday. Thus, the index of economic activity in the services sector of the Eurozone counted to 51.2 in January, while experts forecasted 50.8. Markit composite PMI counted to 51.0 instead of 50.7. The index of economic activity in the UK services sector fell to 50.1 in January, while investors expected 51.1. The ISM non-manufacturing PMI in the US counted to 56.7 in January and was worse than the expected value of 57.2.

Today, during the Asian trading session, aggressive sales of the Australian dollar have been observed. The fall in AUD/USD quotes counted to almost 1.3%. Governor of the Reserve Bank of Australia, Philip Lowe, said that interest rates could be reduced if unemployment rose and inflation remained low.

The "black gold" prices are falling. At the moment, futures for the WTI crude oil are testing the mark of $53.40 per barrel. At 17:30 (GMT+2:00), a report on crude oil inventories will be published in the US.

Market Indicators

• Yesterday, the bullish sentiment prevailed in the US stock market: #SPY (+0.42%), #DIA (+0.65%), #QQQ (+0.88%).
• The 10-year US government bonds yield fell slightly. Currently, the indicator is at the level of 2.68-2.69%.

Economic Data on 06.02.2019:

• At 15:30 (GMT+2:00) important economic reports from the US will be published.

We also recommend paying attention to the following statistics:

• Ivey PMI in Canada at 17:00 (GMT+2:00);
• Data on the labor market of New Zealand at 23:45 (GMT+2:00).

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.14355
Open: 1.14026
% chg. over the last day: -0.25
Day's range: 1.13801 – 1.14093
52 wk range: 1.1214 – 1.2557

EUR is losing positions against the USD. During the last two days of trading, the quotes fell by 50 points. The currency pair is testing the local support of 1.13800. The 1.14100 mark is acting as a mirror support. The demand for the USD remains. The trading instrument has prospects for future descend. The financial market participants expect important economic reports. You should open positions from the key levels.

At 15:30 (GMT+2:00) the US will publish essential economic reports. Keep in mind that the factual and the forecasted indicators may differ.

The indicators do not provide precise signals, 50 MA has crossed 200 MA.

The MACD histogram is in the negative zone and below the signal line, which gives a strong signal to sell EUR/USD.

The Stochastic Oscillator is near the oversold zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.13800, 1.13500, 1.13250
Resistance levels: 1.14100, 1.14400, 1.14600

If the price fixes below 1.13800, consider looking for the market entry points to open short positions. The movement will tend toward 1.13500-1.13250.

Alternatively, the quotes can recover toward 1.14200-1.14500.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.30360
Open: 1.29461
% chg. over the last day: -0.61
Day's range: 1.29250 – 1.29620
52 wk range: 1.2438 – 1.4378

GBP/USD started to descend. Yesterday the pound weakened against the USD by 85 points. The trading instrument has updated the key minimums. The pound is under pressure due to the weak business activity reports and Brexit ambiguousness. The quotes are consolidating around 1.29300-1.29600. You should open positions from the key levels.

The Economic News Feed for 06.02.2019 is calm.

The price fixed below 50 MA and 200 MA, which points to the power of the buyers.

The MACD histogram is in the negative zone but above the signal line, which gives a weak signal to sell GBP/USD.

The Stochastic Oscillator is in the neutral zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.29300, 1.29000
Resistance levels: 1.29600, 1.30150, 1.30550

If the price fixes below 1.29300 expect the GBP/USD quotes to fall further. The closes target to take profit is 1.29000. Consider using trailing stop when opening orders.

Alternatively, the quotes can correct toward 1.29900-1.30200.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.31112
Open: 1.31357
% chg. over the last day: +0.11
Day's range: 1.31247 – 1.31991
52 wk range: 1.2248 – 1.3664

USD/CAD began to recover after a long fall. The trading instrument has updated the local maximums. Right now CAD is testing the 1.32000 level with 1.31550 acting as a mirror resistance.. USD/CAD quotes are up for a correction. An additional pressure on the CAD is provided by the lowering prices on oil. You should open positons from the key levels.

At 17:00 (GMT+2:00) Ivey will publish the PMI for Canada.

The indicators do not provide precise signals, the price fixed above 200 MA.

The MACD histogram is in the positive zone and above the signal line which points toward future growth of USD/CAD.

The Stochastic Oscillator is in the overbought zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.31550, 1.31200, 1.30750
Resistance levels: 1.32000, 1.32350, 1.32600

If the price fixes above the round 1.32000 expect the quotes to correct further toward 1.32350-1.32600.

Alternatively the quotes can descend toward 1.31200-1.31000.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 109.513
Open: 109.858
% chg. over the last day: +0.48
Day's range: 109.779 – 110.040
52 wk range: 104.56 – 114.56

USD/JPY has been consolidating after a long rally. The key levels are 109.800 and 110.100. The currency is supported by the positive US Treasury bonds yield dyanamics. Right now the quotes are starting to grow again. Keep an eye on the US news feed.

The Economic News Feed for 06.02.2019 is calm.

The price fixed above 50 MA and 200 MA which points to the power of the buyers.

The MACD histogram is in the positive zone but below the signal line which gives a weak signal to buy USD/JPY.

The Stochastic Oscillator is in the neutral zone, the %K line is above the %D line which points to a bullish mood.

Trading recommendations

Support levels: 109.800, 109.500, 109.200
Resistance levels: 110.100, 110.500

If the price fixes above 110.100 expect the qutoes to grow futher toward 110.500-110.700.

Alternatively, the quotes can descend toward 109.600-109.400.

RBA governor Philip Lowe opened the door to the possibility of a rate cut in a speech during today's Asian session. In his first speech in the year RBA Governor Philip Lowe stated that rates could go either direction, depending on the labour market and inflation. RBA had left its cash rate unchanged at +1.50% for over two years and was frequently signalling that the next move would be up. Analysts point out that the fall of the Aussie may have generated more attention and we see the case for more volatility being in the cards. We see the case for the Aussie to weaken Philip Lowe's speech, yet investors could be looking for clues in RBA's quarterly monetary statement on Friday. The Aussie weakened against the USD during today's Asian session as the possibility of a rate cut by the RBA appeared and the pair dropped breaking the 0.7230 (R1) support line (now turned to resistance) and tested the 0.7150 (S1) support level. We could see the pair maintaining a downward movement for the time being and the next big date for the pair would be Friday morning when RBA's quarterly monetary statement will be released. Should the bears continue to dictate the pair's direction, we could see it breaking the 0.7150 (S1) support line and aim if not break the 0.7065 (S2) support level. Should on the other hand the bulls take over, we could see the pair rising and aiming if not breaking the 0.7230 (R1) resistance line.

Trump's state of the union speech does not affect the USD

The greenback held steady against a number of its counterparts as there was little reaction to US president's State of the Union speech. In his annual speech, Trump stated that illegal immigration was an urgent national crisis and repeated his promise to build a wall at the US southern border. He also stated that China has targeted US industries and stolen intellectual property for years. He concluded the issue by stating that a new trade deal with China, must include an end to unfair trade practices, reduce the US chronic trade deficit and protect American jobs. Despite analysts pointing out that Trump has said nothing new, concerns grow about the US-Sino trade talks as US officials are to visit China for further trade talks in a few days. After Trump's state of the union speech, the range for flexibility for US negotiators narrows substantially, providing obstacles in the path towards striking a deal. Also the reiteration of the wall building determination on Trumps part, included a wording which could predispose for a possible declaration of a state of emergency, should there be another US government shutdown. Overall, we could see lower volatility for the USD as no US financial releases are expected today, but delayed releases (due to the shutdown) could surprise the market. EUR/USD weakened yesterday and clearly broke the 1.1425 (R1) support line, now turned to resistance. Technically, we maintain the bearish outlook for the pair, as the pair's downward trendline incepted since Friday (01st of February) the remains intact. Should the pair remain under the selling interest of the market, we could see it breaking the 1.1485 (S1) support line and aim for the 1.1345 (S2) support barrier. Should on the other hand the pair's long positions be favoured by the market, we could see it braking the 1.1425 (R1) resistance line and aim for the 1.1460 (R2) resistance level.

Today's other economic highlights

In today's European session, we get Germany's industrial orders growth rate for December. In the Amrican session, we get Canada's Ivey PMI for January and from the US the EIA crude oil inventories figure. Just before the Asian session starts, we get New Zealand's employment data for Q4.

AUD/USD H4

Support: 0.7150 (S1), 0.7065 (S2), 0.6935 (S3)
Resistance: 0.7230 (R1), 0.7330 (R2), 0.7425 (R3)

EUR/USD H4

Support: 1.1485 (S1), 1.1345 (S2), 1.1300 (S3)
Resistance: 1.1425 (R1), 1.1460 (R2), 1.1495 (R3)

Japan Prime Minister Shinzo Abe told the parliament today that the government accepted BoJ's explanation on failing to meet the 2% inflation target. Abe went further and hailed that "what's most important is what is happening to the economy as a result of the BOJ's target, which is that more jobs were created."

BoJ Governor Haruhiko Kuroda defended the central bank's monetary policy to the parliament. He said "expanding base money alone won't immediately have an effect on the economy". And, "with huge expansion of base money, central banks can push down real interest rates and bank lending rates, which in turn would stimulate the economy." He emphasized "this is what happened in the past six years."

EURJPY has been retreating significantly over the last few hours, struggling within an upward sloping channel since January 15 finding strong resistance obstacle around the 50.0% Fibonacci retracement level of the downleg from 133.10 to 118.57, around 125.85. According to the technical indicators, in the 4-hour chart, the RSI and the MACD are losing momentum below the neutral threshold of 50 and near the zero line respectively.

If the market continues to move even lower, the pair could touch the lower Bollinger band around 124.70. In case of an extension below this line and the ascending trend line, the 38.2% Fibonacci of 124.40 could be in focus. Another step lower may reach the 123.40 support barrier.

On the other side, if the market pushes the pair higher, the price could re-challenge the 50.0% Fibonacci and the 125.95 resistance area. More advances would likely open the door for the 127.10 resistance, taken from the highs on December 27.

In the longer timeframe, the price remains in a strong bearish structure following the pullback on 133.10 and only an advance above the 61.8% Fibonacci near 127.60 could confirm bullish correction mode.