The pair settled the session higher, underpinned by a weaker USD and option related flows after a number of large USD/JPY options expired at the NY cut at 1500GMT. Still, 1.3600 EUR/USD barrier level kept vols and gamma relatively stable for much of the session as market participants remained on the sidelines ahead of the eagerly awaited NFP report from the BLS on Friday. The release of an encouraging jobs report from Germany, which revealed that the number of people out of work in Germany fell a seasonally adjusted 16,000 to 2.92 million, did little to support the price action during early London trading hours. In terms of technical levels, supports are seen at the 10-DMA line at 1.3416, 1.3349 and then at 1.3300. On the other hand, resistance levels are seen at 1.3613 (21-DMA upper Bollinger line), 1.3617 and then at 1.3641.
The pair staged an impressive rally late in the session to settle higher, driven largely by option related flows ahead of the eagerly awaited NFP report from the BLS on Friday. The pair was also supported by a touted short EUR/GBP trade recommendation by a UK clearer, with a target of 0.8300. In terms of UK macroeconomic related commentary, GfK said the UK consumer confidence improved this month as Britons become more optimistic about the outlook for the economy and proved more willing to make big purchases. In terms of technical levels, supports are seen at the 21-DMA lower Bollinger line at 1.5662, 1.5636 and then at 1.5600. On the other hand, resistance levels are seen at 1.5892, the 200-DMA line at 1.5995 and then at the psychologically important 1.6000 level.
Large USD/JPY option expiries between 90.00 and 91.50 contained the price action for much of the session, however option decay related flows and hedge position unwinds ahead of the NY cut meant that the pair settled higher. In terms of technical levels, supports are seen at 90.34/29 and then at the 10-DMA line at 90.17. On the other hand, resistance levels are seen at the 61.8% retracement of the 2009-2012 bear trade at 91.46 and then at the 21-DMA upper Bollinger levels at 91.71.