21:00 GMT- Mar 11 (global-view.com) It seemed that traders suddenly lifted their heads in the middle of the week past and realized that the lead EURUSD pair has been unable to distance itself from 1.3600. This was disappointing to those who had built sizeable short forex trading positions in this pair. This is doubly disappointing to those who had figured the better than expected U.S. February employment data would be the catalyst for a strong U.S. advance. So far it hasn’t. That data also came at the time of a WSJ story that suggested that major hedge fund managers were making what was called career bets on a sharply weaker EUR. On Friday, the EURUSD turned higher following word the Obama Administration is considering naming SF Fed President Yellen Vice-Chairman of the Fed. Some say she would then be next in line to be the next Chairman. Markets were mildly unhappy with her because she is seen to be a monetary policy dove. Dealers also noted that the Greek debt default issue has become less of a market factor. A key question for traders will be whether the EURUSD can continue to distance itself from its key 20-day moving average, which was 1.3610 using the Global-View forex database as of the close on Thursday. Data released over this week did not have much of an impact on forex prices in the period. The immediate focus into the weekend is what the Bank of Japan policy decision will be next week. It’s a given that interest rates will remain at near zero levels. On Thursday, Japanese 4Q09 GDP was revised down to 3.8% per annum vs. the previous estimate of 4.6%, There have been press reports that the central bank has been mulling doubling the size of a special bank lending facility for corporations introduced in December. Political pressure from the new government on the central bank to do something concrete about the current deflationary pressures in Japan has been intense. FinMin Kan also opened the specter of possible forex intervention. As for the JPY, we wonder if there have been behind the scenes efforts recently by Japanese monetary authorities to guide the JPY weaker. The currency normally encounters strong seasonal demand at the end of the first quarter of the year. Japanese fiscal yearend flows are still in play. The Japanese fiscal yearend is March 31. Our best guess is that the JPY will come under pressure in 2Q10 and beyond. Volatile trade is likely in the interim. The SNB kept its interest rates steady as expected on Thursday. It also reinforced its commitment supporting the EUR forcibly vs. the CHF via intervention. It was not clear from their comments if the SNB will specifically defend the 1.4600 line or not. Heavy intervention to support the EUR vs. the CHF is inconsistent with the policy objectives of the central bank. See ECONOMIC CALENDAR for a complete list of future forex market events and consensus data estimates. Go to the forex forum for up-to-date market developments and technical trading ideas.
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