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Yen Weakness Sees EURJPY Surge To 7-Year High Ahead of ECB

FOREX
  • The latest leg lower for JPY comes as the BoJ governor acknowledged some of the outcry around the weaker currency, but pledged that the BoJ will firmly support the economy with the current monetary easing strategy. He also added that "stable" JPY weakness is a positive for the Japanese economy.
  • EUR/JPY was the notable climber today amid the broad JPY downtrend. The cross traded on four different big figures today, extending its winning sequence to ten trading days and eventually peaking at Y144.25, levels last seen in January 2015.
  • Nearest resistance stands at 144.58 which is the 0.764 projection of the Mar 7 - 28 - Apr 5 price swing. Further out, the 2014 highs, closer to the 150.00 mark appear a potential target for the move.
  • USDJPY (+1.17%) continues to climb following pair resuming its primary uptrend, after the break of 131.35, May 9 high. The focus today was on 134.48, a Fibonacci projection which has held at the first time of asking. Despite a sharp pullback to 133.61, the pair has resumed its supportive price action and looks set to close above the 134.00 mark.
  • Weaker equities and higher US yields lent support to the greenback which saw the USD index advance a quarter of a percent. In similar vein, the likes of GBP, AUD, NZD and CAD all came under pressure, retreating around 0.5%.
  • EURUSD sits marginally in the green ahead of tomorrow’s ECB meeting/statement. The ECB is now clear that the APP will end in early July, policy rate lift-off will occur in the same month and policy rates will reach zero by September. A 50bp hike in July is a low, but increasing, risk. However, the probability is rising of a one-off 50bp hike or a series of such hikes from September onward.
  • US CPI data and Canadian Employment will be released on Friday.
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