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EUR/USD Through Weds High Despite US Yields Recovering FOMC Minutes Slippage

FOREX
  • EUR/USD improved through yesterday's highs ahead of the NY crossover, extending the bounce off the mid-week low to close to 70 pips. Spot is now within range of the 50% retracement for the weekly range at 1.0974, and a show above this mark could accelerate a further recovery. Volumes are looking solid despite a quieter overnight Asia-Pac session, helping EUR futures post volumes around 30% ahead of average for this time of day.
  • USD weakness comes despite the inching higher of the 10y US yield off the morning low, as markets more closely follow the reversal in German yields, which have now fully undone the opening regional CPI-inspired dip. We have now received state data that equates to ~87% weighting of the national German CPI print, and we estimate that CPI rose by 0.0-0.1% m/m and 3.6-3.7% y/y. The data implies readings broadly in line with consensus expectations.
  • JPY trades again as the poorest performing currency in G10, helping USD/JPY rise further through the 200-dma resistance. Moves remain corrective at these levels, however a rally through 144.96 would make for a firmer short-term reversal higher, opening the 50-dma at 146.72 for direction.
  • Focus for the rest of the Thursday session looks to weekly US jobless claims data and the final US PMI print for December. There are no central bank speakers of note.

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