USD Weakens, EUR Strengthens

EUR/USD
A tale of rise and fall for the pair in today’s European session, as risk events failed to benefit the USD and inflation directs price action. Early news of a step-up in the Ukraine situation hit USD as the possibility of further, more widespread, sanctions enforced by the US led the safe-haven currency to be sold. This USD weakness was combined with some EUR strength, provided by well performing peripheral bonds, helping the pair to print session highs at 1.3851. As the session progressed a disappointing final Eurozone CPI reading for March, 0.4% vs. Exp. 0.5%, led the pair to come off its highs, with the downside move compounded by EUR/GBP steadily declining, on GBP strength, through the day. The pair finished the session having retraced the early strength, moving Asia’s lows to test the 21DMA at 1.3795. Little in the way of risk events or data leaves the pair with little pre-announced trading opportunities, although the development of the Ukrainian issue will be watched closely by markets.

GBP/USD
The pair was led by high GBP strength today, with the USD weakness seen above having less impact. After UK inflation matching expectations yesterday, the story of the pair was again characterized by data releases with the UK unemployment rate, which came in at 6.9%, below the BoE’s threshold level of 7% for the first time since the installation of forward guidance. This release was the catalyst for an impressive upside move with the pair breaking the psychological 1.6800 handle on its way to print session highs. As the session moved into its zenith the pair traded sideways after coming off highs at 1.6818, just 5 pips shy of the 2014 high at 1.6823. With US weekly jobs data the primary risk event for the pair it remains to be seen if the gains made today can be held.

USD/JPY
Overnight trade for the pair was a move into the green as a strong showing by the Nikkei 225, which finished up 3.0%, alongside comments from BoJ’s Kuroda who stated the BoJ’s target will be achieved, helping to break the 102.00 handle. This coupled by disappointing components for Japanese Industrial Production data and the threat of a downgrade to the government’s economic assessment meant JPY weakness directed overnight price action. As the European session opened the USD weakness brought about by a stronger EUR led the pair to spend much of the day trading sideways capped by the 50DMA at 102.37, with little to guide USD/JPY. With BoJ’s Kuroda speaking again overnight and various Japanese data there appear to be several risk events to help price action tomorrow.