The BOJ Meeting in View: Will the Bank of Japan Hike Rates During the Upcoming Meeting?
This week is rich in events and macroeconomic data from major economies. The US President’s inauguration took place on Monday, but there are still a lot of questions that confuse market participants after this event. One of the most interesting events that are going to take place this week is the BoJ meeting. The question is whether the Bank of Japan will raise rates or leave the current rates intact.
The BoJ is anticipated to hike interest rates in the upcoming meeting. According to economists, the 25 bps rate hike is almost a deal. Market participants evaluate the possibility of further monetary policy tightening in Japan in 2025.
Vice Finance Minister for International Affairs Atsushi Mimura said on Tuesday that Japan will closely monitor the steps that the new White House administration will take and how they will affect the global economy. Moreover, they will expect the Bank of Japan to achieve 2% inflation.
Technically, the currency pair is under pressure as JPY is growing on the eve of the BoJ meeting. The currency pair stays below the simple moving average of 50 on the hourly chart, which means that sellers are in control. The closest target on the downside is 155.00, while on the upside if USD/JPY breaks above the SMA50, it will likely target 156.40.
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EUR/USD Falls After Trump’s Inauguration
The US dollar plunged on Monday as Donald Trump didn’t mention tariffs in his inauguration speech. However, the US President has mentioned a significant trade balance deficit when it comes to import/export with the Eurozone. According to the elected US President, he is going to achieve the balance either by imposing new tariffs or selling more oil and gas to the region.
As there was no mention of new tariffs, risk appetites significantly grew, leading to the short-term currency pair growth. However, this short-term effect is over as currently market participants are evaluating the next steps by the ECB and the Fed.
The currency pair is testing the simple moving average of 50 currently. After reaching new local highs on Monday, EUR/USD moved downwards. If it breaks below the SMA50, the closest target will be at 1.0310. The RSI left the overbought area, which confirms the downside. On the upside, the currency pair may target 1.0390 and 1.0420 if it stays above the SMA50.
GBP/USD: The UK Data Confirms Market Participants’ Expectations
The UK retail sales and unemployment data supported the idea that the Bank of England will conduct several rate cuts this year. Retail sales contracted by 0.3% in December, while economists expected this indicator to reach a 0.4% growth. When it comes to the unemployment data, it increased by 4.4% in December, while experts expected the rate to remain at 4.3%.
Both macroeconomic indicators suggest that the Bank of England is likely to be more aggressive when it comes to its monetary policy decisions. According to Oxford Economics, the interest rate will be cut by 100 bps in 2025.
The currency pair attempted to grow on Monday during the inauguration but failed to move higher as currently markets assess the possibility of interest rate cuts by the Bank of England. GBP/USD tested the SMA50 but still stayed above this level. The next target below the SMA50 will be at 1.2170. If the currency pair manages to hold positions above the SMA50, then the closest targets on the upside will be at 1.2300 and 1.2340.
WTI: Oil Under Pressure After the Inauguration Speech and the Middle East Deal
US President Donald Trump has mentioned that the United States is going to increase the oil supply. His speech resulted in WTI prices plunging as the increased supply will shift the balance of demand and supply in the market.
Moreover, the Middle East deal exerts pressure on oil prices as well. While it is still far from peace, the deal decreases the degree of tension, which puts pressure on oil as well. The US dollar gains momentum as the Fed is unlikely to cut rates before the beginning of summer.
WTI quotes are below the SMA50, which means that bears are in control. Moreover, there are lowering peaks, which pinpoints the downtrend. The closest target for WTI is at 73.40, which is the closest support level on the downside. On the upside, WTI is likely to test 76.70 if there is an upside reversal.
Bitcoin: BTC/USD Plunged After Inauguration
Cryptocurrency traders and investors were expecting Donald Trump to say something about the Bitcoin reserve that he promised to create before the election. However, there was nothing on this subject. This led to BTC/USD to move down as market participants were disappointed. However, the currency pair is still above 100,000, which means that the new upside may be on the way.
Bitcoin is trading below the SMA50, which means that bears are currently in control. The closest support level is at 100,800, while the psychological support lies at 100,000. After breaking the SMA50, Bitcoin will be able to target 106,200 and 108,000.
