Global stock markets showed mixed picture, as investors were unsure. On the one hand, the US Federal Reserve’s more dovish approach is good for the market’s sentiment. On the other hand, oil was under pressure after the first increase in US drilling rigs this year.
EUR/USD kept correcting down from last week’s highs. The retracement may continue to 1.1220 and 1.1145 (23.6% and 38.2% Fibo of February-March advance). Watch the euro area’s key March manufacturing and services PMIs at 08:00-09:00 GMT. German and European ZEW economic sentiment index is due at 10:00 GMT. Depending on the data the market will or will not expect more easing from the central bank. Rise above 1.1375 is needed to open way up to 1.1500.
British pound is affected by Brexit concerns and political problems in the UK (British work and pensions secretary Iain Duncan Smith, a supporter of Brexit, resigned over the weekend). The nation will release inflation figures at 09:30 GMT. The forecast for February CPI is rather positive, though public sector net borrowing is expected to increase. The pair will likely test support at 1.4350 and 1.4280, though there still is buying interest for pound, so have cautious targets. Resistance is at 1.4435 and 1.4515.
USD/JPY will likely recover from 111.00 to 112.30/113.00 if the risk the market’s sentiment improves. However, the overall picture remains bearish. Below 111.00 the greenback will be vulnerable for a decline to the psychological mark of 110.00.
AUD/USD was supported by another increase in iron ore prices. Yet, it will be interesting to hear the comments from the Reserve Bank’s Governor Stevens at 05:30 GMT: the RBA doesn’t like high national currency and may try to talk it down. The pair reached 61.8% Fibo at 0.7675 last week and may retreat to 0.7530/00 before resuming growth.