The pair finished the week higher as markets continued to react positively to more reports that the ECB is considering informal, flexible targets for yields on shorter-maturity bonds. The pair also benefited from comments by China’s Wen, who said that China is willing to invest in the European bond market. This week’s economic data did little to influence the price action and instead it was speculation of easing from the ECB that remained the dominant theme right through to Friday’s close. In terms of technical levels, supports are seen at 1.2565/60 and then at 1.2493. On the other hand, resistance levels are seen at 1.2638/63 and then at 1.2693.
The pair trended in tandem with EUR/USD for much of the week and as a result settled with modest gains on the back of speculation that the ECB will announce an aggressive bond buying program. In terms of UK related macro economic data, Hometrack commented that Britain's property market remains under pressure as the economy struggles to recover from recession and the Euroarea crisis drags on. Hometrack expects to see slow downward pressure on prices for the remainder of 2012. Technical studies indicate that support levels may be found at 1.5778/71 and then at 1.5754. On the other hand, resistance levels are seen at 1.5912/33 and then at 1.5997.
The pair settled the week in minor negative territory as market participants attempted to use currency’s safe-haven appeal to hedge their exposure to key events such as Jackson Hole and the upcoming ECB monetary policy meeting. In terms of Japan specific commentary, Japan’s oppositiondominated upper house of parliament passed a censure motion against PM Noda in a bid to force elections and delay the passage of a bill needed to finance government spending. This came after reports overnight that the Japanese government will delay JPY 4-5trl in spending because the date for passing deficit-covering bonds bill hasn't been set according to reports.