EUR/USD managed to soar towards 1.3900 handle

EUR/USD

Following on from last weeks’ ECB related losses, the pair managed to soar towards the 1.3900 handle, amid a combination of USD weakness and unsuccessful dovish ECB rhetoric. At the start of the week ECB’s Nowotny prompted EUR strength after comments that ‘further rate cuts not ruled out but no immediate need for further ECB action’ helped move the currency higher. Overhanging the same period was a weakening USD, with both factors working to give the pair a stellar beginning to the week. Mid-week the unwinding of USD positions related to FOMC kept the pair rising, with EUR reaching its highest point since April 3rd on Wednesday. Moving forward strength garnered so far in the week helped the pair withstand the weight applied in the form of European Ministers and ECB members, who commented the currency was too strong. As a result, keeping itself above the 1.3800 handle, and supported by a strong demand for the much publicised Greek bond syndication. Finishing off the week and after touching the 1.3900 level, briefly surpassing it however, EUR/USD has retraced somewhat, with next week seeing the release of the Eurozone CPI and a host of ECB speakers. 

GBP/USD

Although with less style and beauty than its continental neighbour GBP has achieved a similarly impressive performance, despite a weak finish, as USD weakness benefitted the pair and GBP also strengthened on tier 1 data. With a meteoric rise earlier in the week, mid-week was significantly more muted, with markets awaiting the BoE rate decision, which was unchanged, on Thursday. In early trade the pair broke the 1.6800 handle, however the unwinding of dovish bets before the bank decision left GBP unsupported and the pair has been slowly moving to the downside since then. Although moving towards the 1.6700 handle through the course of Friday, GBP/USD is still well above its starting point for the period. Looking ahead risk events such as UK CPI and the ILO Unemployment report are due for GBP/USD.

USD/JPY

After the previous weeks selling off on ECB and Non-farm Payrolls positions the USD weakness pushed USD/JPY below the 101.50 level. The USD weakness, compounded by the move in JPY helped to support the European currencies as well. The slow start to the week for USD in terms of macro risk events and a lack of mention regarding QQE by the BoJ at their rate decision failed to help the matter, however FOMC minutes released on Thursday piled pressure on the USD-index as talk of a premature rate hike was non-existent. Flight to quality related sentiment, brought on as the US equity sell off took hold, weighed on the pair as it crossed the 101.50 level. Looking to next week US tier 1 data, such as the weekly jobs report, and particularly a BoJ governor Kuroda speech, will provide a healthy set of risk events.