Source: Growth Aces Forex Trading Strategies
EUR/USD
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[li]This will be a very important week for the EUR/USD traders. We have the release of first estimate of the U.S. first-quarter GDP growth and FOMC meeting on April 29. We expect that weak U.S. GDP data and dovish FOMC statement will definitely end bearish long-term trend on the EUR/USD.
[/li][li]What shall we expect from the Fed on April 29? We do not expect any major modifications to the statement. However, downgrading growth assessment should not be a shock – the majority of U.S. data since the previous FOMC meeting in March have surprised on the downside and a June rate hike is off the table. More “dovish” statement will give a boost to the EUR/USD.
[/li][li]The U.S. Bureau of Economic Analysis will also release its first estimate for first-quarter GDP growth next Wednesday. The market expects growth of 1.0% qoq annualized vs. 2.2% in the fourth quarter 2014. In our opinion the growth might be even slightly weaker (0.8%), as we expect that there was no growth in investment spending and net exports subtracted about 0.3 percentage point from GDP growth. Weak GDP data may be another factor supporting EUR/USD bulls.
[/li][li]Eurostat will release April HICP inflation data (on Thursday). We expect headline inflation likely remained at -0.1% yoy and core inflation at the level of 0.6% yoy, also unchanged from the previous month. Inflation is likely to exit negative territory next month. Stronger acceleration of prices growth is likely in the fourth quarter this year, when we have a strong base effect.
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JPY
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[li]The BOJ is expected to hold off on expanding monetary stimulus at the April 30 meeting even though the central bank is likely to trim its inflation forecast for this fiscal year. The BOJ will probably downgrade its core consumer inflation forecast of 1.0% for this fiscal year, but the board will probably maintain its forecast in which inflation will hit roughly 2% in the following two years. Such forecasts will allow the BOJ to justify holding steady.
[/li][li]The board may also consider watering down the timeframe for hitting the target. The BOJ now says Japan will hit the target at or around fiscal 2015, though Governor Haruhiko Kuroda has acknowledged that it may take somewhat longer than that.
[/li][li]Some investors still expect the BOJ to ease again. In our opinion the possibility of such a move is very low, but the JPY is likely to gain after on-hold BOJ decision on Thursday. We maintain our short USD/JPY position with the target at 117.20.
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NZD
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[li]We expect the NZD to strengthen against the USD next week on expected weak U.S. GDP data and possible dovish FOMC statement. However, the AUD is likely to outperform the NZD.
[/li][li]The Reserve Bank of New Zealand will meet this week (Wednesday 23:00 GMT). It is widely expected that the RBNZ will keep interest rates unchanged. The RBNZ will probably left the sentence: “A substantial downward correction in the real exchange rate is needed to put New Zealand’s external accounts on a more sustainable footing”, which will put some pressure on the NZD.
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Source: Growth Aces Forex Trading Strategies