Last week's overview, this week's key events

Source: Dukascopy Bank SA
More disappointment from the Bank of England, another set of worrying data from the Eurozone and optimistic budget from New Zealand were the last week's main highlights. At the same time, the Japanese Yen posted its first weekly gain in more than three months as global weakness and rising tensions in Ukraine spurred demand for havens. The USD/JPY currency pair, however, faces a strong support around 101.30, and only a penetration of this level will clear the way for a weekly S3 at 100.67. Despite the BoJ meeting this week, policymakers are likely to stay pat on the monetary policy and offer no surprises as they are confident the recent tax hike will not weigh on the economy. The FOMC meeting on Wednesday is also unlikely to provide a significant boost to the U.S. Dollar, keeping in mind solid gains in the labour market, hence, the pair is expected to fluctuate around the same level and continue fluctuating between weekly R1 and 200-period SMA (4H chart) at 102.26 ad recent low at 101.30.

Inflation data, MPC Official Bank Rate Votes as well as second estimate GDP are also unlikely to become major catalysts for the Sterling, as the latest Inflation Report showed no intension to increase interest rates anytime soon. Additionally, last week's claimant count change and unemployment rate were not able to surprise markets to the upside, therefore, even in case of the stronger-than-expected data the reaction is projected to be short-lived. At the moment of writing the cable was struggling to move above 1.6796 level, represented by 200-period SMA (4H chart), weekly S1 and a resistance line of the falling wedge pattern formed on the 4H chart. There are now two key levels for short and long traders, found at 1.6732 and 1.6896 respectively.

The currency, which is worth paying attention to is the loonie. Canadian currency was almost unchanged over the last five trading days, however, a couple of weeks earlier it was one of the main gainers among other major currencies. Both CPI and retail sales have a potential to surprise markets to the upside, pushing the loonie higher. Dukascopy traders, however, do not believe in the strength of the land of the maple leaf, as they are selling the Canadian Dollar in 61% of the time. Additionally, the descending triangle pattern on USD/CAD formed on the monthly chart is moving to its apex, as the pair is ready to penetrate the resistance line. Strong fundamentals from Canada can move the pair back into pattern's boundaries, with bears focusing on 1.0813 as a main support level.
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