- The focus over the week will be on the ECB, as well as US CPI and Retail Sales.
- How much of the European Central Bank (ECB) is already priced in?
EUR/JPY is currently bid, trading some 0.16% higher travelling between a low of 1118.43 and 118.67. The focus over the week will be on the ECB, as well as US CPI and Retail Sales - The question is, how much of the European Central Bank (ECB) is already priced in and how far will the Yen fall on the back of rising global yields and a return of risk appetite?
Yields have begun to move off recent lows as risks on the trade front have receded, and this, in turn, is leaning heavily on the Yen which has otherwise enjoyed a run of safe-haven flows over the summer period. Looking ahead, the next major risk in the ECB, but at the same time, the Dollar could be a spanner in the works for the bears.
ECB expected to be dovish
With respect to the ECB, analysts at TD Securities explained that they are on the dovish side of expectations, looking for a 20bps rate cut and €40bn/month of QE:
"We're fairly comfortable with our downside view on rates, though less certain on QE given the scale of push-back from some of the ECB hawks recently.A more-dovish-than-expected ECB puts downside risks back into view for EURUSD, with renewed QE as the main headwind. Prospects for a sustained move lower depend more on future signals, however, as much of the Fed/ECB policy divergence may already be priced."
US data in focus
With regards to the US data, we have the Federal Reserve's interest rate decision later this month as well and considering the less negative backdrop when it comes to trade talks, the FOMC might come to the conclusion that a 50 basis point cut would be far too aggressive and depending on data, they may even hold off entirely which would weigh heavily on the euro and likely on the cross as well. On the flip side, should data fall in the same camp as last week's disappointment in the Nonfarm Payrolls data, then a 25 basis point cut could still dishevel the Dollar, which is currently the cleanest dirty shirt in the laundry basket - Thus supporting the euro and, most likely, the cross as well.
EUR/JPY levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD drops below 1.0800 after German Retail Sales data
EUR/USD has come under fresh selling pressure and trades below 1.0800 after the data from Germany showed that Retail Sales declined by 1.9% MoM in February. Resurgent US Dollar demand is adding to the downside in the pair. US data are next in focus.
GBP/USD stays weak near 1.2600 amid market caution
GBP/USD remains defensive near 1.2600 in European trading on Thursday. The hawkish tone from Fed Governor Christopher Waller keeps the US Dollar afloat amid a cautious trading environment ahead of key US data releases and the Good Friday trading lull.
Gold price holds strength ahead of US core PCE inflation
Gold price holds onto gains near $2,200 in Thursday’s European session. The precious metal exhibits firm footing ahead of the United States core PCE Price Index data for February, which will be published on Friday.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.