Given the psychological importance of ¥130, lower buying volume so far this month and overbought based on the slow stochastic, technical analysis would suggest that further strong gains in the near future are unfavourable. However, higher than expected inflation this afternoon could drive the dollar strongly in the short term at least. The long-term target to the upside based on Fibonacci would be the 423.6% weekly extension around ¥138. Before that might be reached, though, a retracement back to the area of ¥127 would be more likely and provide a less risky entry for buyers.

Key data this week

Bold indicates the most important releases for this symbol.

Wednesday 11 May

• 12:30 GMT: American annual inflation (April) – consensus 8.1%, previous 8.5%
• 12:30 GMT: American annual core inflation (April) – consensus 6%, previous 6.5%
• 12:30 GMT: American monthly inflation (April) – consensus 0.2%, previous 1.2%
• 12:30 GMT: American monthly core inflation (April) – consensus 0.4%, previous 0.3%
• 23:50 GMT: https://www.leaprate.com/forex/market-news/weekly-data-canadian-and-japanese-inflation-in-view/Japanese current account (March) – consensus ¥1.75 trillion, previous ¥1.65 trillion

Thursday 12 May

• 12:30 GMT: American monthly PPI (April) – consensus 0.5%, previous 1.4%
• 12:30 GMT: American monthly core PPI (April) – consensus 0.6%, previous 1%
• 12:30 GMT: initial jobless claims (7 May) – consensus 195,000, previous 200,000

Friday 13 May

• 12:30 GMT: American monthly import prices (April) – consensus 0.6%, previous 2.6%
• 14:00 GMT: Michigan consumer sentiment (preliminary, May) – consensus 64, previous 65.2

Euro-pound, daily

While the euro is still at a six-year low against the US dollar, the situation against the pound sterling has been quite different in the aftermath of last week’s very negative meeting of the Bank of England. The risk of stagflation remains high in the eurozone and the ECB is almost certain to be much slower than the Fed and BoE in raising rates. However, the BoE announced last week its expectations that the British economy will stagnate this quarter before contracting around 1% in Q4 2022. For now, the war in Ukraine isn’t particularly in focus for traders, so this factor’s removal has helped the euro somewhat.

Similarly to dollar-yen above, overbought conditions after a very strong upward movement would suggest consolidation before any attempt to push higher. However, ATR at around half a penny is at its highest in nearly a year, which might suggest a relatively short pause before possible resumption of gains. The 61.8% weekly Fibonacci retracement around 86.4p seems to be the next strong resistance, while 31 March’s intraday at 85p could be the main near-term support.

Thursday is an extremely active day for British data, with preliminary GDP for Q1, balance of trade and various industrial releases all due at 6:00 GMT. The pound’s reaction to these figures could be quite dramatic, so it would traditionally make sense to wait until the dust settles or at least keep positions small if they’re to be held throughout the day tomorrow.

Key data this week

Bold indicates the most important releases for this symbol.

Wednesday 11 May

• 6:00 GMT: German annual inflation (final, April) – consensus 7.4%, previous 7.3%
• 6:00 GMT: German monthly inflation (final, April) – consensus 0.8%, previous 2.5%

Thursday 12 May

• 6:00 GMT: British annual GDP growth (preliminary, Q1) – consensus 9%, previous 6.6%
• 6:00 GMT: British quarterly GDP growth (preliminary, Q1) – consensus 1%, previous 1.3%
• 6:00 GMT: British annual industrial production (March) – consensus 0.5%, previous 1.6%
• 6:00 GMT: British annual manufacturing production (March) – consensus 2.3%, previous 3.6%
• 6:00 GMT: British annual construction output (March) – consensus 2.4%, previous 6.1%
• 6:00 GMT: British balance of trade (March) – consensus negative £10.6 billion, previous negative £9.26 billion
• 6:00 GMT: British annual GDP (March) – consensus 6.8%, previous 9.5%

Friday 13 May

• 6:45 GMT: French annual inflation (final, April) – consensus 4.8%, previous 4.5%
• 6:45 GMT: French monthly inflation (final, April) – consensus 0.4%, previous 1.4%

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