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Minutes of BoJ's meeting on March 9 and 10 show a continued commitment to monetary easing, with the aim of achieving price stability in a sustainable and stable manner, accompanied by wage increases. Neverthelesse, a few members noted emerging "positive signs" toward reaching the price stability target, indicating a changing price environment.

With respect to yield curve control, some members emphasized the need to examine the effects of various implemented measures aimed at improving market functioning. They acknowledged that JGB yield curve appeared smoother than before. One member explained that if observed CPI inflation declined and market projections of interest rates calmed down, distortions in the yield curve would likely be corrected.

In terms of the 2% price stability target, several members underscored the importance of maintaining its commitment. One member added that the central bank should anchor inflation expectations to 2% by committing to achieve the target.

Meanwhile, another member expressed concern that discussing the target might lead to "unnecessary speculation" on monetary policy conduct, especially given the growing possibility of achieving the price stability target. This member also argued against revising the joint statement of the government and BoJ.

Full minutes of BoJ March meeting here.

Risk-on, risk-off, and then risk-on. It's a roller-coaster ride for investors last week,with a slew of heavy-weight events. In the end, commodity currencies ended as the best performers, with support from rebound in sentiment. Canadian Dollar held a slight advantage over Australian and New Zealand Dollar. But all have them have reasons to extend last week rally, subject to overall risk sentiment, of course.

Dollar and Euro tied as the worst performers, even though both Fed and ECB extended tightening cycle. But even so, technically, Euro remains in pole position against the greenback for now, as also evidenced in the outlook in Dollar Index. Swiss Franc was somewhat dragged down by Euro too, while Yen and Sterling ended mixed.

Risk sentiment resilient, Dollar pressured in an eventful week

The US markets saw a week full of actions and events, with complex intermarket reactions influenced by economic data, the FOMC rate decision, and ongoing concerns over regional banks. The robust April non-farm payroll data, featuring strong job and wage growth, and a dip in unemployment rate, was overshadowed by significant downward revisions for March numbers. Fed softened its hawkish tone after delivering the expected 25bps rate hike, but Chair Jerome Powell refrained from providing clear guidance on a pause.

Investor sentiment was largely driven by persistent worries over regional banks, causing DOW to plummet mid-week. However, sentiment rebounded on Friday following JPMorgan's upgrade of Western Alliance, Zions Bancorp, and Comerica, citing that they were "substantially mispriced" due to short-selling activity. Apple's strong fiscal Q2 report, which beat top and bottom line expectations, further boosted sentiment.

Although DOW briefly broke near-term support at 33362.64, S&P 500 and NASDAQ defended their corresponding levels effectively. As for the SPX, rise from 3491.58 is expected to continue as long as 4049.35 support holds, with key hurdle at 4325.28 cluster resistance (61.8% retracement of 4818.62 to 3491.58 at 4311.69).

Dollar Index struggled to extend its near-term rebound, suggesting that consolidation from 100.78 might have already completed without even reaching 55 D EMA (now at 102.54). Downside breakout through 100.78 appears imminent. The question is whether it could bottom at around 61.8% retracement of 89.20 to 114.77 at 98.96. Or, there won't be enough buying for a bounce until 61.8% projection of 114.77 to 100.82 from 105.88 at 97.25.

Euro also struggled on uncertain ECB path ahead

Euro didn't fare better than Dollar last week, even as ECB also delivered a 25bps rate hike. President Christine Lagarde made it clear that "we are not pausing." However, the step-down in tightening created some uncertainty for the path ahead. While some analysts still expect two more 25bps hikes in June and July, risks are tilted towards an earlier end due to tightening bank lending conditions and collapsing loan demand in the Eurozone.

EUR/AUD ended notably lower at 1.6313 last week, and although 1.6219 support still holds, the risks of a top formation ahead of 100% projection of 1.4281 to 1.5976 from 1.5254 at 1.6949 are increasing. Given bearish divergence condition in D MACD, firm break of 1.6219 would suggest that EUR/AUD has entered a correction to the whole uptrend from 1.4281, risking deeper pullback into the 1.5254/5976 support zone.

Commodity currencies triumph as risk sentiment and bullish factors align

Commodity currencies were the biggest winners last week. Resilient risk sentiment played a role, but each of New Zealand, Australian, and Canadian had their own bullish factors. Strong Q1 job data from New Zealand supported another rate hike by RBNZ on May 24. RBA surprised with a 25bps last week, rather than another pause. RBA Statement on Monetary Policy also argue it's not done with tightening.

Canadian Dollar once experienced some jitters with WTI crude oil spiked to lowest level since 2021. But oil price than rebounded quickly, with WTI settling above 71 handle. Strong job data from Canada prompted doubts on whether BoC should rethink about its rate pause. At least, the possible of a rate cut by BoC was pushed further into 2024.

The Loonie was the relatively stronger one among commodity currencies last week. AUD/CAD's late decline raises the chance that corrective pattern from 0.8941 has completed already, after rejection by 0.9104 resistance. Failure to sustain above 55 D EMA (now at 0.9058) is also a bearish signal.

Deeper decline is mildly in favor this week through 0.8941. The main question is whether the sell off could power through 61.8% projection of 0.9545 to 0.9043 from 0.9229 at 0.8919. If that happens, deeper fall could be seen towards 100% projection at 0.8727, with downside acceleration.

USD/CAD Weekly Outlook

USD/CAD's steep decline last week indicates short term topping at 1.3666. More importantly, the downside acceleration now argues that fall from 1.3860 is the third leg of the pattern from 1.3976. Initial bias is no won the downside this week first 1.3299 support first. Firm break there will target 100% projection of 1.3976 to 1.3224 from 1.3860 at 1.3395 next. On the upside, though, above 1.3477 minor resistance will turn intraday bias neutral first.

In the bigger picture, as long as 55 W EMA (now at 1.3312) holds, up trend from 1.2005 (2021 low) is still in favor to resume through 1.3976 at a later stage. However, sustained trading below the EMA and 38.2% retracement of 1.2005 to 1.3976 at 1.3233 will raise the chance of bearish reversal. Deeper should then be seen to 61.8% retracement at 1.2758 next.

In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern only, which might have completed at 1.2005. That is, up trend from 0.9506 (2007 low) is expected to resume at a later stage. This will remain the favored case as 55 M EMA (now at 1.3025) holds.

EUR/USD extended the consolidation from 1.1094 last week and outlook is unchanged. Initial bias stays neutral this week first and further rally is in favor. On the upside, firm break of 1.1094 will resume larger up trend to 1.1273 fibonacci level. Break there will target 61.8% projection of 0.9534 to 1.1032 from 1.0515 at 1.1441 However, considering bearish divergence condition in 4H MACD, break of 1.0908 support will indicate short term topping and turn bias back to the downside.

In the bigger picture, rise from 0.9534 (2022 low) is in progress for 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. Sustained break there will solidify the case of bullish trend reversal and target 1.2348 resistance next (2021 high). This will now remain the favored case as long as 1.0515 support holds, even in case of deeper pull back.

In the long term picture, while it's still early to call for long term trend reversal at this point, the strong break of 1.0635 support turned resistance (2020 low) should at least turn outlook neutral. Focus is now on 55 M EMA (now at 1.1162). Rejection by this EMA will revive long term bearishness. However, sustained break above here will be an indication underlying bullishness and target 1.2348 resistance next.

USD/JPY dropped sharply last week after failing to break through 137.90 resistance. But as a temporary low was formed at 133.48, initial bias is neutral this week first. Fall from 137.76 is seen as the third leg of the pattern from 137.90. Below 133.48 will target 133.00 first, break will target 129.62 support. Still, as long as 129.62 holds, larger rebound from 127.20 is still in favor to resume at a later stage. On the upside, above 135.68 minor resistance will turn bias back to the upside for 137.76/90 instead.

In the bigger picture, price actions from 151.93 high are currently seen as a corrective pattern to the long term up trend. The first leg should have completed at 127.20. Rebound from there is seen as the second leg. Sustained break of 38.2% retracement of 151.93 to 127.20 at 136.34 will bring stronger rebound to 61.8% retracement at 142.48. Meanwhile, break of 129.62 will argue that the third leg is starting through 127.20 low.

In the long term picture, price action from 151.93 is seen as developing into a corrective pattern to up trend from 75.56 (2011 low). While deeper decline cannot be ruled out, downside should be contained by 38.2% retracement of 75.56 to 151.93 at 122.75.

GBP/USD's uptrend continued last week without sign of topping. Initial bias remains on the upside this week. Next target is 1.2759 fibonacci level first. Firm break there will target 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095.

In the bigger picture, the rise from 1.0351 medium term term bottom (2022 low) is in progress for 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759. Sustained break there will add to the case of long term bullish trend reversal. Further break of 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095 could prompt upside acceleration to 100% projection at 1.3895. For now, this will remain the favored case as long as 1.1801 support holds, even in case of deep pull back.

In the long term picture, while the rise from 1.0351 (2022 low) has been strong, there is no clear indicate of long term trend reversal yet. As long as 1.4248 resistance holds (2021 high), long term outlook will remain neutral at best.

USD/CHF edged lower to 0.8818 and recovered again, but stayed below 0.8993 resistance. Initial bias stays neutral this week first. While down trend from 1.0146 could still extend lower, strong support should be seen from 61.8% projection of 1.0146 to 0.9058 from 0.9439 at 0.8767, which is close to 0.8756 long term support, to bring rebound, at least on first attempt. On the upside, break of 0.8993 resistance will indicate short term bottoming, on bullish convergence condition in 4H MACD, and turn bias back to the upside for stronger rebound.

In the bigger picture, fall from 1.1046 (2022 high) is seen as a leg in the long term range pattern from 1.0342 (2016 high). So, downside should be contained by 0.8756 to bring reversal. Sustained break of 0.9058 support turned resistance will be the first sign of medium term bottoming. However, decisive break of 0.8756 will carry larger bearish implications.

In the long term picture, long term sideway pattern from 1.0342 (2016 high) is expected to continue between 0.8756/1.0342. However, sustained break of 0.8756 will open up deeper fall back towards 0.7065 (2011 low).

AUD/USD rebounded strongly last week but was still bounded in range of 0.6563/6804. Initial bias remains neutral this week first. Near term outlook also stays bearish as long as 0.6804 resistance holds, and down trend resumption through 0.6563 low is in favor at a later stage. Nevertheless, sustained break of 0.6804 should indicate completion of whole fall from 0.7156, and turn near term outlook bullish for retesting this high instead.

In the bigger picture, as long as 61.8% retracement of 0.6169 to 0.7156 at 0.6546 holds, the decline from 0.7156 is seen as a correction to rally from 0.6169 (2022 low) only. Another rise should still be seen through 0.7156 at a later stage. However, sustained break of 0.6546 will raise the chance of long term down trend resumption through 0.6169 low.

In the long term picture, initial rejection by 55 M EMA (now at 0.7128) retains long term bearishness. That is, down trend from 1.1079 (2011 high) could still resume through 0.5506 (2020 low) on resumption.

USD/CAD's steep decline last week indicates short term topping at 1.3666. More importantly, the downside acceleration now argues that fall from 1.3860 is the third leg of the pattern from 1.3976. Initial bias is no won the downside this week first 1.3299 support first. Firm break there will target 100% projection of 1.3976 to 1.3224 from 1.3860 at 1.3395 next. On the upside, though, above 1.3477 minor resistance will turn intraday bias neutral first.

In the bigger picture, as long as 55 W EMA (now at 1.3312) holds, up trend from 1.2005 (2021 low) is still in favor to resume through 1.3976 at a later stage. However, sustained trading below the EMA and 38.2% retracement of 1.2005 to 1.3976 at 1.3233 will raise the chance of bearish reversal. Deeper should then be seen to 61.8% retracement at 1.2758 next.

In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern only, which might have completed at 1.2005. That is, up trend from 0.9506 (2007 low) is expected to resume at a later stage. This will remain the favored case as 55 M EMA (now at 1.3025) holds.

GBP/JPY's fall from from 172.30 was contained slightly above 167.95 resistance turned support last week, then it recovered. Initial bias remains neutral this week and further rally is in favor. On the upside, break of 172.30 will resume larger up trend to 100% projection of 148.93 to 172.11 from 155.33 at 178.51. Nevertheless, firm break of 167.95 should confirm short term topping, and turn bias back to the downside for deeper pull back to 165.40 support instead.

In the bigger picture, based on current momentum, up trend from 123.94 (2020 low) is likely ready to resume. Next target is 161.8% projection of 122.75 (2016 low) to 156.59 (2018 high) from 123.94 at 178.69. This will now remain the favored case as long as 165.40 support holds, in case of retreat.

In the longer term picture, as long as 55 M EMA (now at 154.40) holds, rise from 122.75 (2016 low) could still extend higher at a later stage to 195.86 (2015 high).