EUR/USD managed 3 bullish sessions yesterday and the single currency made gains across the board. Nothing dramatic emerged from the ECB press conference and this was enough to ensure more EUR short-covering. China is still closed and the main event today will be the BOJ meeting this afternoon.
EUR/USD has finally broken out of its short-term range trade and is currently stalling at the 61.8% retracement of the 1.3170/1.2800 fall (SEE CHART) which comes in at 1.3030. The ECB press conference was described as the most boring ever, with Draghi saying nothing of interest so it seems the market has focussed on the statement that the ECB stands ready to assist with OMT should they request it. Comments attributed to German FinMin Schaeuble that they won’t stand in the way of bail-outs also helped the EUR. There is important technical resistance (double-top neckline) looming at 1.3080 so I’d be careful about getting too bullish until that level has been breached.
EUR/JPY has rallied alongside the rebounding oil price and higher equity markets. It has taken out a prior high at 102.10 but is also stalling ahead of a 61.8% resistance level at 102.25 (SEE CHART).
AUD/USD spiked above 1.0250 and took out some weak stops but has now fallen back somewhat as EUR/AUD buying continues to dominate. The important level to watch in this pair is 1.0325 as if the bulls can reclaim that level, then the short-term downtrend will be in jeopardy. EUR/AUD continues to march higher and next technical resistance there is at 1.2870.
USD/JPY is again trading at 78.50 after a quiet 40 pip range overnight. The BOJ is the main event with some speculation that they may again come up with some special measures to try and get the 1% inflation target back on course.
Cable has followed the EUR/USD higher, with most of the heavy EUR/GBP buying now seemingly finished. Middle East Sovereigns were again the main buyers in early European trade but resistance is looming at 1.6260.
Good luck today.