EUR

The market reacted in quite a surprising fashion to comments from Mario Draghi that the ECB is ‘technically ready’ to lower deposit rates. He has said this before so it shouldn’t have come as too much of a surprise but obviously the short-term EUR market was caught long.

EUR/USD fell very sharply from 1.3200 to 1.3040 but reports from some of the major banks put all of the selling down to leveraged accounts, which would support the theory that last night’s sell-off was just a clean out of speculative intraday longs. The bullish trend-line was marginally breached but prices are now back above there. 

Chart

USD/JPY has bounced almost 100 pips from yesterday’s lows with barrier protection ahead of 97.00 proving to be very solid indeed. I’m expecting a fairly quiet Asian session but with a definite buy-dip bias now in play. Remember that tonight is NFP so we may get some positional readjustment as well.

AUD/USD has been supported by very solid bids around 1.0220/25 and the bears will need to break below there to generate some momentum. I’d expect many of these bids to be cancelled around the time of the NFP data so keep that in mind. Offers are waiting near 1.0330/40 so risk-reward pre-NFP would seem to favour the bulls from current levels near 1.0250.

AUD/NZD support at 1.2050 was marginally broken and of course EUR/AUD gave back all of the previous day’s gains.

EUR/CHF is back at 1.2200, and this is the level where volumes suddenly spiked higher on a bullish break some weeks ago. A few daily closes below here and we may see a further wearing-down of bullish conviction.

Sterling made some modest gains on the crosses, against the EUR and the JPY, after slightly improved construction PMI data improved the mood toward the UK economy.

Good luck today and TGIF.