EUR/USD
European volumes were thin throughout the session due to the Ascension holiday, therefore with a lack of tier 1 data or notable economic commentary from the Eurozone, much of today’s price action was led by the USD index. The USD index softened throughout trade and back towards the 200DMA after yesterday’s sharp gains and ahead of the US GDP release. Upon the GDP release the US Dollar Index extended these losse,s but then later pared them as participants reacted to the strong jobs report and components of the GDP report rather than the temporary factors which weighed on growth, therefore providing the EUR/USD with some upside for the pair to trade flat on the day.
GBP/USD
The GBP/USD was placed under pressure in early trade, weighed on by GBP/JPY which traded at a one-month low after breaking below the 50 and 100DMAs, with month-end related buying of EUR/GBP also putting pressure on the GBP/USD. However, a weaker USD then helped reverse these early losses and saw the pair trade steady throughout the session with participants shrugging off comments from BoE’s Weale who said the BoE needs to start raising interest rates sooner rather than later if it wants to avoid sharp and painful increases in the future. Looking ahead, focus remains stateside with a lack of tier 1 data out of the UK tomorrow.
USD/JPY
The USD/JPY drifted lower throughout Asia-Pacific trade due to broad-based USD weakness as participants shrugged off the weak Japanese retail sales report. Although the post-GDP/USD strength managed to reverse a majority of these early losses and trade in close proximity to a 1.4bln option expiry, with further upside for the pair being obtained from favourable interest differential flows but then later limited amid a consequent reversal in USTs which was attributed to pension, insurance and Asian names. Of note for JPY, following the BoJ updating their JGB purchase range, analysts at MS said the move is JPY bullish, with crosses set to come under further pressure, as the EUR/JPY broke below its 200DMA adding they expect the USD/JPY to follow.