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ECB Fails To Bolster Recent Euro Optimism, Greenback Recovers

FOREX
  • Having recently broken above 2022 channel resistance, EURUSD extended gains overnight to trade at a six-week high of 1.0094, however, Thursday saw a sharp reversal for the single currency.
  • Despite the ECB delivering its second 75bps hike in two meetings, the Governing Council appeared to suggest a slowdown is likely, following “substantial progress” in the withdrawal of monetary policy accommodation.
  • EURUSD is hugging intra-day lows approaching the APAC crossover, back below parity and down 1.15% for the session. On the downside, support to watch is 0.9856, the former bear channel resistance.
  • Losses have been even more pronounced in EURJPY (-1.32%). Despite the sharp fall, moving average studies continue to highlight a bullish backdrop and the cross will focus on strong support at 143.80, Monday’s low and just below the 20-day exponential moving average.
  • Single currency declines have boosted the USD index (+0.80%), however, some strong performances in emerging markets, especially in LatAm FX, are offsetting the greenback resurgence with dollar indices remaining substantially lower on the week.
  • Bank of Japan highlights the Friday calendar in APAC trade, with their decision and Monetary Policy Statement due. A mixture of European GDP and CPI data releases will follow. Canadian GDP crosses alongside US Core PCE Price Index, before US pending home sales and UMich confidence data rounds off the week.
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