The pair was seen lower from the get-go with EUR/USD testing

EUR/USD

The pair was seen lower from the get-go with EUR/USD testing the 1.3500 handle to the downside as the USD-index rose 0.1%, as markets continued to focus on Asian bids seen ahead of 1.3500. The pair eventually moved below the 1.3500 level to towards July's lows at 1.3491 with the level having not been broken since February. This level was subsequently broken as EUR/USD reached its lowest YTD level at 1.3477, which was previously printed in February. The upside in USD/CHF above 0.9000 was said to be behind the move, with light volumes also exacerbating price action. This also came alongside Interbank and hedge fund names remaining net short in EUR/USD, outweighing real-money and corporate accounts said to be on the bid. To the downside, analysts at IFR also noted talk of option barriers at both 1.3450 and 1.3475. The main data point for the session was the US CPI release which came broadly in line the expectations, although the Y/Y figure showed inflation is above 2.0% and thus is in line with the Fed's targets. This saw a bout of USD strength and added further momentum to the move lower as EUR/USD took out its YTD low at 1.3477 and a touted option barrier at 1.3475. Thereafter, this move was eventually pared as EM currencies prospered from a shift into high yield currencies. Looking ahead, tomorrow seen an absence of tier 1 data or economic commentary from the Eurozone.

GBP/USD

Today once again saw an absence of market-moving tier 1 UK data or economic commentary, with the UK CBI report and UK public sector net borrowing figures failing to present GBP with any substantial traction. The pair traded in a relatively narrow range throughout the session, despite the pair seeing some upside as participants reacted to the lower than expected ex food and energy US CPI numbers. Although, this move was subsequently pared as focus shifted to the Y/Y component which remained above 2.0% and thus in-fitting with the Fed’s inflation targets. Looking ahead, attention turns to tomorrow’s BoE minutes release. Although expectations are for a 9-0 vote in favour of maintaining the central banks’ current monetary policy programme, upside risks for the pair are posed by the possibility of dissent within the MPC given the recent slew of positive UK data points and continued jobs market strength.

USD/JPY

Overnight, JPY weakened against its major counterparts alongside the move higher in the Nikkei 225 as participants returned to market after yesterday’s public holiday, which subsequently saw USD/JPY test the 101.50 level to the upside. As has been the case in recent trade, the pair was contained within a particularly tight trading range with a lack of newsflow out of Japan or pertinent developments regarding the Ukraine/Russia situation to guide prices. The main source of price action for the pair stemmed from the move higher in USTs following the US CPI release, which consequently saw JPY prosper at the expense of USD amid unfavourable interest differential flows, with USD/JPY moving back below the 101.50 level. Looking ahead, tomorrow sees a lack of tier 1 data from Japan, although BoJ Deputy Governor Nakaso is due on the speaker schedule and thus will be a source of focus for participants. However, any threat of further sanctions by The West on Russia could act as a more substantial source of price action for USD/JPY.