EUR/USD
EUR/USD continued its ascent towards the psychologically important 1.4000 level despite growing expectations of monetary policy action within Europe. So much so that a seven year high Spanish service PMI reading and further peripheral bond yield spread tightening saw the pair move into positive territory, where it remained for the duration of the session. The focus very much remains on the ECB monthly meeting on Thursday with outside bets of a deposit rate cut, although the consensus is for no implementation of QE despite the continued pressure for such measures.
GBP/USD
GBP/USD rallied heading into the release of the UK services PMI as beats from Spanish, French and Italian surveys enkindled market talk of a better than expected release from the UK. This positioning muted the immediate price action when the data was released above expectations at 58.7 vs. Exp. 57.8. This upward trend observed in the first half of the session continued through the session ahead of the MPC meeting Thursday. Markets will be waiting tentatively as this is the first MPC meeting since the UK unemployment fell below the 7% guidance threshold. In terms of technical levels, a break above the psychological level of 1.7000 opens up the door towards August 09 highs at 1.7044.
USD/JPY
News flow out of Japan continued to be slow as market participants observe a second day of holidays in the country. The gains seen by GBP/USD and EUR/USD following good data releases has pressured the USD index, to the lowest level since Oct-2013. This in turn has filtered through to the pair which has been trending lower throughout the session. Going forward, the price action will likely remain a by-product of the sentiment stemming from the ongoing stand-off in Ukraine and any consequent flight to quality which tends to weigh heavily on the pair. Of note, Japan returns to the markets tomorrow with the release of BoJ April meeting minutes and Japanese PMIs.