Global FX: Pairs Lower On ECB Rate Talk

The pair finished the London session lower following the release of weaker-than-expected IFO data from Germany, which occurred as a result of disappointing exports. Additionally, the data was followed up by cautious comments from ECB’s Coeure who expects rates to remain low for an extended period of time and that forward guidance has served well, therefore there is no need to change it. In terms of technicals, it is worth noting that the pair is trading well above it’s 50/100/200-DMA while support levels can be seen at 1.3453 (Aug-20 high), 1.3399 (Aug-28 high).However, in terms of resistance levels the pair still has a while to go before it reaches 1.3598 (Feb-5 high) and 1.3569 (Sept-19 high). In terms of option volumes the pair has seen an increase in activity for 1-, 3- and 12-month expiries.

GBP/USD
The pair finished the London session lower as a result of GBP weakness being observed following various factors with an ‘over-reaction’ to yesterday’s rumours of EU Common Agricultural Policy related selling of EUR/GBP and a trimming of last week’s gains seen in the cross following the Fed’s decision not to taper its bond-buying programme. From a technical perspective, the pair is currently trading significantly above it’s 50/100/200-DMA as a result of a strengthening GBP over the course of the past three months. However, if the pair does continue its more recent strength then resistance can be found at yesterday’s high of 1.6072.

USD/JPY
The pair finished the London session trading with minor losses after T-note strength that drove down yields lessening the pairs carry trade attraction, therefore erasing earlier gains seen in the pair. In terms of technical analysis, the pair is currently trading within the range of its 50- and 100-DMA, which can be found at 98.69 (support) and 99.09 (resistance) respectively. In terms of options there was an expiry at 99.00 for the NY cut however, at the expiry the pair traded below this level and therefore failed to drive price action.