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FOMC minutes released that policymakers split for the decision to raise interest rates in April, plunging the dollar. The sterling slumped mainly for technical reasons while the biggest beneficiary of the day was the Japanese yen after BoJ Kuroda’s statement that further easing steps will be taken if it's needed. The euro had a range-bounded session again with traders expect today’s Draghi speech to determine direction.

Fed will not raise rates in April

FOMC minutes of March’s 15-16 policy meeting that released on Wednesday started to clear off Fed’s gloomy outlook. Even though the policymakers were divided regarding the time for a rate hike, the overall conclusion is that they highlighted the global risks and reached a “caution” and “slow” strategy that reduced the odds for a rate hike in the first half of the year. A numerous of policymakers said that a rate hike in April “would be prudent or signal a sense of urgency”, in contrast, some others stated that if the economic data meet expectations, April’s rate raise “might well be warranted”. There are two policymakers who supported a rate hike even in March. The greenback slumped against the G10 basket following minutes’ publication with gains only against the sterling and the Swedish krona. The most skeptical traders will eye today’s Yellen’s speech to enlighten if Fed will raise rates on 27th of April, despite the signals that will not. The most important clues to gauge from the speech will be the possibilities for a rate hike in the next months after April.

Draghi’s speech is likely to determine euro’s direction

The single currency has another range-bounded session and was traded broadly unchanged against a numerous of the G10 currencies on Wednesday and early Thursday as there were no major economic indicators or speeches to affect the market importantly. The ECB President speech today which will succeed ECB’s Monetary Policy Meeting Accounts is likely to be the pressure the currency need to determine a direction.

The EUR/USD pair is unchanged at 1.1420, after a 1.1330 – 1.1437 range, leaving the outlook unchanged ahead of the ECB President’s speech. The euro was unable to overcome the 1.1437 resistance that we mentioned yesterday following the FOMC minutes and has since headed lower, to trade down to 1.1330 before a mild bounce back towards 1.1420. The euro was broadly stronger as traders sold dollars to lock profits as other headed for a safe haven status after the Federal Reserve took a more dovish tone. Therefore, we remain bullish on this pair with the next target being the psychological level of 1.1500.

Yen climbed following Kuroda’s easing signals

The Japanese Yen surged on Thursday morning, following BoJ Governor Haruhiko Kuroda that hinted that central bank would take additional monetary easing steps if needed to approach its 2% inflation target. He highlighted that “Japan’s economy continues to recover moderately as a trend, although some weaknesses are seen in exports and output”. It’s worth to mention that BoJ surprised by adding negative interest rates to its massive asset-buying program in a fresh attempt to support and accelerate inflation rise towards 2% target.

Reference: FXStreet