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CDU Emerges Victorious From Regional Elections, ECB Up This Week

EURJPY

EUR/JPY has added 8 pips so far, moving away from a fresh one-week low, and last trades at Y133.29. The rate has absorbed political news from Germany, as well as headlines surrounding U.S. Tsy Sec Yellen's comments & G7 corporate tax rates agreement, showing little in the way of immediate reaction.

  • Germany's CDU secured a victory in Saxony-Anhalt's regional elections, fending off challenge from the far-right. The result is seen as a tailwind for CDU's leader Laschet ahead of federal elections slated for September.
  • Italian Public Admin Min Brunetta told Il Messaggero over the weekend that Italy expects to receive EUR25bn in the first tranche of EU recovery-fund package "between July and August".
  • German factory orders & Spanish CPI headline the regional calendar today.
  • The main point of note this week is Thursday's monetary policy decision form the ECB. EUR/JPY 1-week implied vol sits +0.06pp at 5.30% after printing a two-week high of 5.78% last Friday.
  • Bulls look for a break above Jun 1 high of Y134.13, a key near-term resistance. Next topside target is located at Y134.84, bull channel top. Conversely, a dip through the 20-EMA at Y133.02 would expose May 24 low of Y132.52.

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