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Trading ideas for EUR/USD, USD/JPY and Brent

April 29, 2022

EUR/USD: The European currency is weakening against the US dollar, but is strengthening against the yen and the pound. Yesterday preliminary April data on inflation in Germany was published: the index of consumer prices fell from 2.5% to 0.8% month-over-month but turned out to be higher than the forecasted 0.6%. Year-over-year the index rose from 7.3% to 7.4% also exceeding experts’ expectations (7.2%). Inflationary pressures in Germany and the Eurozone as a whole continue to rise, but investors hope that in April their rates will peak and the situation will stabilize. The greatest contribution to the growth of prices is still made by the increase in the cost of fuel and energy resources. Also note the recent comments of the Vice President of the European Central Bank (ECB) Luis de Guindos, who said that despite the jump in consumer prices above the target level of 2%, wage growth, which is the key to sustainable development, remains subdued in the Eurozone. This implies that the regulator remains skeptical about a serious tightening of monetary policy.

SELL 1.0468/TP 1.0310/SL 1.0534

 

USD/JPY: The yen is weakening today against its main competitors – the pound, the U.S. dollar and the euro. The pressure on the Japanese currency was put by the results of the Bank of Japan meeting. The regulator maintained the current soft monetary policy and left the interest rate at -0.10%. Thus, the hopes of some experts that the officials will cancel some stimulus measures to support the JPY rate, were not justified. Moreover, the bank raised the inflation growth forecast for the current year from 1.1% to 1.9% and announced its readiness to buy an unlimited number of 10-year government bonds in order to keep the yield around 0.25%. These actions may contribute to further weakening of the Japanese currency, especially against the background of monetary policy tightening by the world’s leading central banks.

BUY 131.25/TP 133.40/SL 130.50

 

Brent: Brent shows mixed dynamics today and is trading in sideways ranges, being in a state of uncertainty. The previous day’s report on US oil stockpiles supported the growth of quotations: crude oil inventories increased by 0.692 million barrels last week, compared with analysts’ expectations for a build of 2.000 million barrels.. Meanwhile, gasoline stocks decreased by 1.573 mln barrels and distillates – by 1.449 mln barrels. Also, the exchange rate is strengthening in anticipation of the upcoming increase in oil output by OPEC+, which is to be approved on May 5. However, further growth is still hindered by new coronavirus fears in China, which may lead to a decrease in demand for oil from the world’s second largest economy.

BUY 107.70/TP 109.70/SL 107.00