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FOREX: Broad Euro Strength Most Notable Against Low Yielders

FOREX
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  • EURUSD has been consolidating its strong half a percent rally on Friday, with the pair tracking at session highs around 1.0910 as the US session kicks into gear. With the associated move higher for European yields following the German debt deal headlines, it is the low yielding JPY and CHF which have really felt the pinch, with EURJPY and EURCHF rising 1.12% and 0.85% respectively.
  • For EURJPY, a bull cycle remains in play and Wednesday’s pullback was a technical correction. The cross has recently breached a resistance at 161.19, the Feb 13 high, and a weekly close above this mark would strengthen a bullish condition. This opens 162.70 (Jan 28 high) before 164.08, the Jan 24 high and a key resistance for the cross.
  • Today’s price action has seen EURCHF rise above 0.9650 for the first time since July last year, and spot has reached an initial target of 0.9655, the 61.8% retracement of the May-August downswing. Last week’s breach of a cluster of highs between 0.9500/20 provided a clean technical break to the topside, and moving average studies have moved into a bull mode position. Resistance is now seen at 0.9774, the July ’24 high. Further out, focus would be on 0.9930, the 2024 peak.
    • It is worth noting that the SNB will meet next Thursday, where the consensus remains for the central bank to cut the policy rate by 25bps to 0.25%.
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  • EURUSD has been consolidating its strong half a percent rally on Friday, with the pair tracking at session highs around 1.0910 as the US session kicks into gear. With the associated move higher for European yields following the German debt deal headlines, it is the low yielding JPY and CHF which have really felt the pinch, with EURJPY and EURCHF rising 1.12% and 0.85% respectively.
  • For EURJPY, a bull cycle remains in play and Wednesday’s pullback was a technical correction. The cross has recently breached a resistance at 161.19, the Feb 13 high, and a weekly close above this mark would strengthen a bullish condition. This opens 162.70 (Jan 28 high) before 164.08, the Jan 24 high and a key resistance for the cross.
  • Today’s price action has seen EURCHF rise above 0.9650 for the first time since July last year, and spot has reached an initial target of 0.9655, the 61.8% retracement of the May-August downswing. Last week’s breach of a cluster of highs between 0.9500/20 provided a clean technical break to the topside, and moving average studies have moved into a bull mode position. Resistance is now seen at 0.9774, the July ’24 high. Further out, focus would be on 0.9930, the 2024 peak.
    • It is worth noting that the SNB will meet next Thursday, where the consensus remains for the central bank to cut the policy rate by 25bps to 0.25%.