The EUR made solid gains overall, supported by continued buying in the cross pairs like EUR/JPY and EUR/GBP. Comments from ECB board member Asmussen that the ECB will do whatever it can to ensure that the EUR is irreversible also gave the single currency some support. Stock markets in the US reversed early losses to finish flat, with Asian markets unlikely to find any lead there.
EUR/JPY was the main mover with comments from BOJ Governor Shirakawa encouraging speculators to short the Yen. The BOJ’s quarterly regional report included a large number of downgrades and the Chief promised ‘seamless monetary easing’ as the economy slows down. Stop-loss orders were triggered above 104.20 and the next important technical resistance is a 61.8% retracement level at 104.80 (see chart).
EUR/GBP continues to make slow but steady gains. EUR/USD found solid support ahead of 1.3000 and plentiful US corporate offers towards 1.3080, ensuring another range-trading event. It will likely take leads from the crosses again during Asian trade.
USD/JPY worked through some heavy offers yesterday during Asia with most of the buying coming from macro funds. There are more heavy offers near 80.00 from real-money accounts and Japanese corporates which will certainly slow down bullish momentum.
The AUD was remarkably quiet yesterday, trading for most of the day in a 30 pip range between 1.0300/30 and only marginally breaking outside of this range during US trade. Tomorrow’s CPI is the main risk event this week and interbank dealers reported virtually no interest whatsoever from any direction. Solid bids are reported near 1.0280 and sellers are sure to re-appear near last week’s 1.0410 highs, and these are the obvious levels to watch.
The CAD should also find some trading interest ahead of tomorrow’s Bank of Canada decision. They are expected to leave rates unchanged but there is strong speculation that the subsequent statement may revert to more dovish language.
Good luck today.