Yen extends weakness, EUR holds ground

Market Brief

The Japanese monetary base increased from 204.8 trillion to 219.9 trillion yen end of March. USDJPY and JPY crosses continue gaining momentum. USDJPY rallied to 103.94 in Tokyo, the highest since January 23rd. The bullish trend strengthens as weak economic data boost expectations of additional BoJ stimulus; the pair now tests 104.00 offers. The next key levels stand at 105.00/44 year highs. Option bids trail above 103.00/25 area. EURJPY extends gains to 142.92; a break above 143.79 March resistance will shift focus to year high of 145.69.

AUDUSD remained little changed in Sydney despite 5.0% contraction in building approvals (m/m) in February, job vacancies increased from -1.7% to 2.6%. Technically, the bullish momentum loses pace pre-NFPs on Friday. We keep our resistances placed at 0.9339 (Fibonacci 61.8% on Nov’13 – Jan’14 pullback) and 0.9499/0.9500 (Fibo 76.4% & psychological level). On the downside, bids are eyed at 0.9180/0.9200 zone, if broken will place the 200-dma (currently at 0.9138) at risk. AUDNZD extended gains to 1.0752. The bias remains on the upside with key target standing at 1.0823 (100 dma & broad downtrend channel top).

EURUSD saw sharp demand as Europe walked in this morning. EURUSD rallied to 1.3820, confirming that the European traders are less and less leaned towards dovish action from ECB meeting on Thursday. Yet the direction remains unclear. We see offers in charge above the 21-dma (currently at 1.3832) pre-ECB, while bids dominate above 1.3785 for tomorrow’s expiry. On a similar pattern, EURGBP tests the 100-dma (0.83085) on the upside. Option bids expiring today are placed at 0.83000/0.83500/0.84000 and 0.84750; bearish momentum lightens.

NZDUSD hit 32-month high yesterday, yet aggressively sold-off to 0.8587 following soft Global Dairy Trade milk auction result. A daily close above 0.8605 will keep the bias on the upside (according to MACD 12, 26). The next key target is seen at 0.8745 (Fibonacci 123.6% on Aug-Oct 2013 rally).

The US will release the ADP employment report in New York today, the NFPs and unemployment rate are due on Friday. Markets anticipate 195’000 new US private jobs added in March versus 139’000 in February. We do not expect significant price action on jobs data given Fed’s determination to normalize policy on March meeting, despite Yellen’s efforts to temper Fed hawks by recent days’ dovish comments.

Today, the economic calendar consists of UK March Nationwide House Price m/m & y/y, Spanish March Unemployment Net (‘000s), Norwegian January Unemployment Rate, UK March Construction PMI, Euro-Zone PPI m/m & y/y, US Mar 28th Mortgage Applications, US March ADP Employment Change, US March ISM New York and US February Factory Orders.