The JPY took center stage overnight as the USD/JPY came close to the resistance level of 96.70 as traders expect further easing to come from the Bank of Japan. Comments from BOJ deputy governors helped to push the JPY lower. Deputy governor nominee Iwata said the BOJ can achieve the 2% inflation target within two years if it buys long-term bonds.
He also said that the BOJ needs to achieve “decisive easing”. Another deputy governor nominee Nakaso, stated that the BOJ could expand the size of asset purchases. These comments, added to the comments made by BOJ governor nominee Kuroda yesterday that the BOJ would pursue aggressive easing if he’s confirmed kept the pressure on the JPY.
The technical levels show support at 96.00 and 95.80 and resistance at 96.70 and 97.00. As stated yesterday, the direction for the USD/JPY remains higher, with traders looking towards to the 100.00 level. Some traders have commented that this level could be attained as early as the end of this month.
The GBP continues under pressure as economic data from the United Kingdom continues to pressure the currency. Industrial Production fell -2.9% in January, far greater than expectations that the decline would be -1.1%. The recent downtrend of the British Pound has given sellers renewed confidence and the break through the support level of 1.4850 suggests the possibility of testing 1.4800 in the near future. Technical support is at 1.4830 and 1.4800, with resistance at 1.4880 and 1.4910.
After rallying yesterday the EUR finds itself once again trading near the 1.3000 level after testing support at 1.2990 in overnight trading. Italian CPI rose 1.9% in February which was in line with consensus, although lower than January’s 2.2% number. Spanish bond issue has had mixed results as the 12 month bond improved to 1.363% from 1.548%, while the 6 month declines to 0.794% from 0.859%.
There doesn’t seem to be any reaction on the EUR based on these results. The move yesterday in EUR fell way short of the resistance level at 1.3115 and the direction for the single currency remains downward. The next newsworthy item is the EU Council meeting on Thursday and Friday of this week. Traders will be looking for any “press releases” ahead of the meeting.
For the moment, resistance for EUR/USD is at the 1.3060 level and 1.3080. Support remains at the 1.2990 level, followed by 1.2960. With the pressure on the the British Pound and the Japanese Yen, the EUR could find some buying interest in cross trading that could support it in the near term.
The pressure on the EUR should remain intact, and rallies should be seen as opportunities to sell the currency.
Further reading: Forex Analysis: EUR/JPY Resumes Bullish Rebound Targeting 128.00
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