Weekly technical outlook – USD/JPY, EUR/GBP, USD/CAD [Video]

US CPI inflation - USD/JPY

Wednesday will be an inflation day in the US. The new CPI data will cover March and will give a comprehensive overview of the first quarter. Inflation has been surpassing expectations this year, which is why investors need to be careful about positive surprises.

Forecasts are for the headline CPI to heat up to 3.4% y/y from 3.1% previously. However, if the core measure extends its downtrend to 3.7% as analysts project, rate cut expectations may not change significantly, providing little impetus to the US dollar.

From a technical perspective, a notable move in USDJPY might be approaching as the pair has been in a tight range within the 151.00 area and below the 2022-2023 ceiling of 151.93 over the past two weeks. Friday’s rebound on the 20-day SMA implies a bullish bias, but surpassing the 152.33 resistance level is necessary for a sustained rally towards the 153.50-153.80 range.

Alternatively, the 20-day SMA might attempt to block the way towards the 149.25-149.40 support zone if selling forces resurface.

The FOMC meeting minutes are scheduled for the same day, but there may not be much new information as policymakers have already shared their thoughts on interest rates.

ECB policy meeting - EUR/GBP

Meanwhile, in the eurozone, the European Central Bank's (ECB) policy meeting may not result in rate changes on Thursday, but it will be closely watched for any stronger cut signals as investors believe that the central bank will step into the easing cycle earlier than the Fed in June.

Unlike the Fed, the ECB has no other meeting scheduled before June. Hence, policymakers could enhance their communication efforts because of the stronger disinflation momentum and the subdued economic growth in the eurozone. Yet, with the geopolitical risks remaining high, policymakers might maintain some caution, likely saying that a rate cut in June will be subject to the data.

In charts, EURGBP will be under the spotlight as the pair is struggling to complete a bullish double bottom pattern above the important 0.8580 resistance zone. If the pair finds enough buyers to pierce through that bar, the 200-day SMA could be the next challenge ahead of the 0.8630 region.

If there’s a pullback, the 0.8550 level could be the last chance for a rebound before the bullish market structure weakens.

BoC policy meeting - USD/CAD  

The Bank of Canada (BoC) might hold an eventful meeting on Wednesday. Interest rates could remain steady, but when policymakers discuss June’s roadmap, the doves might overtake the hawks after Friday’s disappointing employment report. The rise in migration might be responsible for the continuous increase in the unemployment rate, though with the core inflation hovering around the central bank’s 2.0% midpoint target, there might be little support for a delay.

USDCAD could be an interesting case this week. Having rotated at the bottom of a bullish channel for the fourth consecutive time, there is scope for a trend continuation higher. However, for that to happen, the bulls will need to clear the 1.3600-1.3622 ceiling in order to reach the channel’s top at 1.3677. Above that, the rally could peak up steam towards the 1.3745 barrier.

If the BoC delays any rate cuts or provides no clear guidance, the spotlight will fall back to the channel’s support area of 1.3470, while the SMAs might attempt to calm selling pressures within the 1.3500 territory too. Should the bears claim the 1.3470 floor, the price could initially stabilize around 1.3420 before sliding towards January’s support of 1.3360.