Better than expected macro economic data from Germany

EUR/USD

Better than expected macro economic data from Germany failed to provide a solid boost for the bulls on Tuesday and the price action remained volatile throughout the session. Nevertheless, the pair managed to settle in minor positive territory, after decent demand for Spanish T-Bills buoyed investor sentiment ahead of this Thursday’s bond auctions by the Treasury. Positive sentiment was largely offset by the looming elections in Italy, where there is a risk of a hung parliament. In terms of technical levels, supports are seen at 1.3286/76 and then at 1.3265. On the other hand, resistance levels are seen at 1.3415, the 10DMA line at 1.3423 and then at the 21DMA line at 1.3441.

GBP/USD

The pair settled the session little changed as market participants remained on the sidelines ahead of the MPC minutes release scheduled for Wednesday. It is widely expected that the release will echo comments made by King during his Q&A following the release of the Quarterly Inflation Report, where the governor indicated that the central bank is willing to look though CPI to support growth. In terms of technical levels, supports are seen at 1.5414, 1.5393 and then at 1.5375. On the other hand, resistance levels are seen at 1.5544/50 and the 10DMA line at 1.5598.

USD/JPY

The pair trended lower throughout the session on Tuesday, as market participants were left little impressed by comments from Japan’s Aso who said that the timing of the Bank of Japan chief nomination is unclear and there is no intention of buying foreign bonds through a fund. Still, the most recent BoJ policy meeting minutes revealed that some Bank of Japan board members saw extending the duration of government bonds purchased under the BoJ's asset buying programme to around five years (current up to three yrs) as an option for the central bank. Furthermore, members said that the bank is unlikely to exert substantial influence over inflation expectations just by setting 2% inflation target. In terms of technical levels, supports are seen at 93.32 which is the Tenkan-Sen line, the psychologically important 93.00 level and then at 92.22. On the other hand, resistance levels are seen at 94.22/41 and then at 94.46.