The Japanese yen moved sideways on Wednesday after the relatively weak economic data from Japan. According to the country’s statistics agency, the economy contracted in the first three months of the year. The agency attributed the decline to the rising import costs amid a weaker yen. Also, the crisis in Ukraine contributed to the crisis. The GDP declined by an annualized rate of 1%, which was lower than the median estimates of 1.8%. These numbers came a day after Fumio Kishida’s government approved a $21 billion supplementary budget made up of subsidies and cash handouts to low-income households.
The British pound slipped even after the latest consumer and producer inflation data. According to the statistics agency, the country’s consumer inflation rose to a 40-year high of 9% in April. This inflation is about double what the BOE predicted a few months ago. Now, the BOE believes that rising energy prices will push the headline CPI to 10%. Still, the numbers revealed that UK house prices declined slightly in March. Prices increased by 9.8%, down from 11.3% in February. The average home price in the UK was 278,000 pounds.
UK stocks were little changed as investors reflected on the strong inflation numbers in the UK and the hawkish statement by the Fed chair. In a statement on Wednesday, the chair said that the bank will continue hiking interest rates. The FTSE 100 also reacted to corporate earnings from some of the biggest companies in the index. Anglo American delivered upbeat results, which it attributed to higher commodity prices. Burberry, on the other hand, warned about its annual sales as the Chinese economy continued slowing.
The GBPUSD pair retreated from its weekly high of 1.2505. It is now trading at 1.2415, which is above the 25-day moving average. The Relative Strength Index (RSI) has been in an upward trend while the Relative Vigor Index (RVI) has made a bearish crossover pattern. Therefore, the pair will likely keep falling as bears target the key support level at 1.2300.
The EURUSD pair moved sideways as investors reacted to the hawkish statement by the Fed chair. The pair is between the middle and upper line of Bollinger Bands. It is also slightly above the important support level at 1.0480, which was the lowest level on May 6th. The RSI has pointed downwards while volume has been falling. Therefore, the pair will likely remain in this range during the American session.
The ETHUSD pair remained in a tight range as consolidation in the crypto industry continued. It is trading at the 2,000 level where it has been in the past few days. The pair has formed a bearish pennant pattern, which is usually a bearish sign. The pair is trading along the envelopes indicator while the MACD has moved above the neutral level. The pair will likely have a bearish breakout.
Source: FXStreet – OctaFX Analyst Team