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Greenback Weakness Resumes, German CPI Bolsters Euro

FOREX
  • The greenback was once again on the back foot throughout Thursday’s trading session. The USD index has declined 0.45% approaching the APAC crossover and is gravitating towards last weeks lows of 101.92. Broad greenback weakness has been aided by a firmer Euro which has been underpinned by stronger-than-expected German CPI data and an associated adjustment in ECB terminal pricing.
  • EURUSD came within 4 pips of key short-term resistance at 1.0930, the Mar 23 high. A break of this level would reinstate the recent bull theme and signal scope for a climb towards 1.1033, the Feb 2 high.
  • Sterling was also one of the day’s best performers. GBPUSD has recently cleared a number of resistance points, strengthening a short-term bullish condition. Sights are on resistance at 1.2401, the Feb 2 high and 1.2448, the Jan 23 high.
  • For USDJPY, after multiple tests towards the 133.00 handle throughout the trading session, the pair fell around 60 pips during US hours, narrowing in on the overnight lows of 132.21. Broad USD weakness has had little impact on the pair up until this point with the firmer risk backdrop in general underpinning cross/JPY strength.
  • Overall, the trend direction in USDJPY remains down and this week’s gains are considered corrective. The 20-day EMA has been tested. Firmer resistance is seen at 133.00, the March 22 high, and the 50-day EMA that intersects at 133.38. A clear break of this EMA would highlight a stronger reversal.
  • Overnight, China PMIs will kick off Friday’s busy docket. Eurozone CPI Flash Estimate, US Core PCE price index and the MNI Chicago Business Barometer, will be in focus ahead of the weekend close.
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