The Fed decided to reduce the quantitative easing program further. The Fed noted that further reduction program will be focused not only on the U.S. labor market statistics, but also on other important economic indicators. These statements will strengthen the U.S. dollar, which has regained virtually all lost ground in March 2014.
In addition, it is worth noting the positive U.S. data that came out on the previous trading week, exerting downward pressure on the euro/dollar.
All such statistics in general confirm the fact that the U.S. economy continues to recover and the end of 2014 the Fed completely abandon the quantitative easing program.
This week the pair shall continue further falling. The possible target is 1.3700 where we shall wait for a serious bounce up.
Beside the negative trade balance data and reduced investment income another negative data on the UK budget deficit was published last week. Given the above we can conclude a high probability of the pair devaluation on the current trading week.
Opportunities to sell will appear when the pair will grow to Fibonacci 38.2 or breaks the current support levels 1.6406 and 1.6328. The first decrease target is a strong support level 1.6251.
The USD/JPY last week growth supported the U.S. dollar first of all. The dollar has grown significantly after the U.S. Federal Reserve decision to keep reducing the quantitative easing program further.
Now we presume the growth will be continued and this week. We do not expect any news that will impact the pair strongly to change its direction.
Special attention should be paid to the fundamental data analysis. The data will be released on March 28 during the Asian session and point to the current state of the Japanese economy. If the forecast is justified, it will only support the growth rate. Shall the release not coincide with the forecast we can expect fluctuations on the pair.
The growth target is the level 103. Shall the pair fall it will go to 100.