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USD Index Broadly Unchanged, EURJPY Remains on Front Foot

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  • The USD index remains broadly unchanged on Friday as the mixture of lower US yields and a reversal lower for major equity indices provided mixed signals for the greenback. Marginally higher-than-expected inflation data for the Eurozone keeps EURJPY on the front foot, rising around 0.4% on the session. Sights are on 171.56, the Apr 29 high and a key resistance. A break of this hurdle would confirm a resumption of the uptrend.
  • The Swiss Franc goes from the strongest performer in G10 on Thursday to one of the weakest through Friday’s session. We pointed out that moves in both EURCHF & USDCHF appeared corrective at this stage, at least from a technical standpoint, however upcoming CPI data will likely be the key driver of short-term CHF sentiment.
  • EUR/CHF remains below the 20-day EMA and the next support to watch lies at the 50-day EMA (0.9778). A clear break of this average would signal potential for a deeper retracement and expose the May 3 low (0.9730).
  • Overall conditions for EURGBP remain unchanged and a bearish theme is in play. Key supports have recently been pierced; the 0.8500 pivot level, and an important support zone between 0.8498, the Feb 14 low, and 0.8493, the Aug 23 ‘23 low. We have pointed to a clear break of these price points as strengthening the bearish technical theme.
  • However, despite multiple tests below the key 0.8500 mark, both this week and across the past year, EURGBP has been unable to close below this level since August 2022. A stronger recovery would target initial firm resistance at 0.8540, the 20-day EMA. Above here, the Apr 23 high and bull trigger is at 0.8645.
  • Next week’s key event risk will be the ECB decision as markets try to gauge expectations for future policy decisions, with today’s data potentially paving the way for a cautious/hawkish hold. Separately, US jobs data will provide the latest key data point heading into the June FOMC meeting.
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  • The USD index remains broadly unchanged on Friday as the mixture of lower US yields and a reversal lower for major equity indices provided mixed signals for the greenback. Marginally higher-than-expected inflation data for the Eurozone keeps EURJPY on the front foot, rising around 0.4% on the session. Sights are on 171.56, the Apr 29 high and a key resistance. A break of this hurdle would confirm a resumption of the uptrend.
  • The Swiss Franc goes from the strongest performer in G10 on Thursday to one of the weakest through Friday’s session. We pointed out that moves in both EURCHF & USDCHF appeared corrective at this stage, at least from a technical standpoint, however upcoming CPI data will likely be the key driver of short-term CHF sentiment.
  • EUR/CHF remains below the 20-day EMA and the next support to watch lies at the 50-day EMA (0.9778). A clear break of this average would signal potential for a deeper retracement and expose the May 3 low (0.9730).
  • Overall conditions for EURGBP remain unchanged and a bearish theme is in play. Key supports have recently been pierced; the 0.8500 pivot level, and an important support zone between 0.8498, the Feb 14 low, and 0.8493, the Aug 23 ‘23 low. We have pointed to a clear break of these price points as strengthening the bearish technical theme.
  • However, despite multiple tests below the key 0.8500 mark, both this week and across the past year, EURGBP has been unable to close below this level since August 2022. A stronger recovery would target initial firm resistance at 0.8540, the 20-day EMA. Above here, the Apr 23 high and bull trigger is at 0.8645.
  • Next week’s key event risk will be the ECB decision as markets try to gauge expectations for future policy decisions, with today’s data potentially paving the way for a cautious/hawkish hold. Separately, US jobs data will provide the latest key data point heading into the June FOMC meeting.