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EURUSD Closing On The Highs, Rises 1.1% As ECB Dust Settles

FOREX
  • EURUSD rallied sharply higher Thursday, extending the bull cycle that started at 1.0635 on May 31. A number of important retracement points have been cleared, reinforcing bullish conditions and this signals scope for an extension higher. The European Central Bank raised its deposit rate by 25bp to 3.5% on Thursday and signalled another quarter-point hike next month after revising higher its inflation forecasts.
  • The renewed strength for the single currency suddenly brings the April highs of 1.1095 back into focus for EURUSD. Between here and there, 1.0986, the 76.4% retracement of the Apr 26 - May 31 swing may provide the first resistance.
  • EURJPY has soared 1.20% on Thursday, and trades at its highest level since 2008, reaching the next objective for the rally at 153.62, a Fibonacci projection. The next topside level of note is 154.62, another projection level before 155.00, psychological round number resistance.
  • The USD index has fallen 0.80% amid a strong rally for major equity benchmarks. Landing with the deluge of US data at, import prices offered a mildly weaker than expected take which may have assisted the broad greenback weakness.
  • The weaker dollar and risk on tone has benefitted the likes of AUD (+1.37%), the strongest performer across G10 bar the Norwegian Krone. GBPUSD (+0.92%) also extended on its recent surge, with the pair closing in on the 1.28 handle.
  • Friday will see the June BOJ decision where the broad consensus looks for no change at this meeting. Market expectations have moved away from a potential YCC tweak this week, with July now seen as a more likely window for an adjustment. The European morning's focus will be the final, detailed Eurozone readings of CPI, along with several ECB speakers including Holzmann, Rehn, Muller, Centeno, and Villeroy.
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