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FOREX: More Stable Equities Prompt Cross/JPY Recovery

FOREX
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  • More stable equity markets since the European open have helped curtail the Japanese yen bid on Monday, with the push below 157.00 for USDJPY seeing a decent 60 pip reversal across the US session.
  • In similar vein, the likes of EURUSD rising back above 1.02 and GBPUSD extending its bounce from the 1.21 handle have assisted a strong recovery for both EURJPY and GBPJPY.
  • The trend condition in EURUSD remains bearish and recent short-term gains have proved to be a correction. The recent break of 1.0226 confirms a resumption of the downtrend and marks an extension of the price sequence of lower lows and lower highs. Sights are on 1.0138 next, a Fibonacci projection.
  • For GBPJPY, early price action saw the cross briefly extend losses since Dec 30 to 4.5%, before 190.00 acted as decent support. We have seen the cross retrace the best part of 1% to levels around 191.75, despite remaining down on the session.
  • Overall, the USD index is still holding on to moderate gains, with the post-NFP greenback impetus still present. The DXY printed a fresh cycle high at 110.17 before slipping back just below the 110 mark. Commodity currencies have traded with relatively contained ranges, whereas USDCHF had its first print above 0.9200 since May last year as the pair approaches key medium-term resistance at 0.9224/44.
  • US PPI on Tuesday provides a warm-up for the main CPI data on Wednesday, when UK inflation data is also due.
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  • More stable equity markets since the European open have helped curtail the Japanese yen bid on Monday, with the push below 157.00 for USDJPY seeing a decent 60 pip reversal across the US session.
  • In similar vein, the likes of EURUSD rising back above 1.02 and GBPUSD extending its bounce from the 1.21 handle have assisted a strong recovery for both EURJPY and GBPJPY.
  • The trend condition in EURUSD remains bearish and recent short-term gains have proved to be a correction. The recent break of 1.0226 confirms a resumption of the downtrend and marks an extension of the price sequence of lower lows and lower highs. Sights are on 1.0138 next, a Fibonacci projection.
  • For GBPJPY, early price action saw the cross briefly extend losses since Dec 30 to 4.5%, before 190.00 acted as decent support. We have seen the cross retrace the best part of 1% to levels around 191.75, despite remaining down on the session.
  • Overall, the USD index is still holding on to moderate gains, with the post-NFP greenback impetus still present. The DXY printed a fresh cycle high at 110.17 before slipping back just below the 110 mark. Commodity currencies have traded with relatively contained ranges, whereas USDCHF had its first print above 0.9200 since May last year as the pair approaches key medium-term resistance at 0.9224/44.
  • US PPI on Tuesday provides a warm-up for the main CPI data on Wednesday, when UK inflation data is also due.