Talking Forex Weekly Wrap: EUR/USD Settles Lower For Week

EUR/USD
The pair settled the week lower, on the back of a firmer USD, which remained bid in spite of numerous attempts by central bankers to downplay the significance of the most recent FOMC meeting. On that note, Fed's Kocherlakota and Fed's Fisher cautioned on over-interpreting the latest FOMC decision, a dovish stance was also echoed by ECB and BoE, which in turn resulted in an aggressive flattening of short-term rates in Europe and the US. In particular, ECB's Coeure said that our exit is distant and our monetary policy will remain accommodative. In addition to that, ECB's Draghi said that economic outlook still warrants an accommodative monetary policy stance. In other news, the Sueddeutsche Zeitung article noted that ECB staff are considering a new bond-buying plan that would encompass the debt of all 17 euro-area nations. ECB’s Asmussen said that ECB President Mario Draghi’s statement that the central bank is looking "360 degrees" at new policy options only refers to fixing the transmission mechanism. Finally, in terms of technical levels, support levels are seen at 1.2985/56 and then at 1.2900. On the other hand, resistance levels are seen at 1.3151/77 and then at 1.3200.

GBP/USD
The pair mimicked the price action by EUR/USD for much of the week and as such settled lower as market participants continued to fret over the potential QE tapering by the Federal Reserve. In terms of UK related commentary, the release of the final GDP reading revealed that although the Q/Q was left unrevised at 0.3%, the Y/Y was revised lower. As such, this means that the economy shrank 7.2% from peak, more than its previous estimate of 6.3%. There was little in terms of UK macroeconomic news flow and instead the price action remained a by-product of the risk on/off sentiment which continues to depend on the outlook for Fed QE tapering. Separately, BoE's Bean said that there are no technical obstacles preventing negative rates. He added that bank rate cut, including to below zero, still an option; MPC will keep it under review. Technical support levels are seen at 1.5193, the 61.8% retracement of the 1.4832 to 1.5753 move at 1.5184 and then at 1.5111. On the other hand, resistance levels are seen at 1.5346, the 30DMA line at 1.5378 and the psychological level at 1.5400.

USD/JPY
The pair settled the week higher, as the USD remained well bid even as central bankers sought to downplay the reaction to the latest FOMC. There was little in terms of Japan specific news flow, but Japan officials said G-20 finance chiefs likely to discuss tapering of easy money policy in Moscow and that finance chiefs likely interested in hearing China views on money policy. The G-20 meeting is scheduled for the 18th-19th July. Technically, support levels are seen at 98.17, 97.57 and then at 97.00. On the other hand, resistance levels are seen at 99.47, 99.93 which is the 61.8% retracement of the 133.74 to 93.75 move and then at 99.98.