The US dollar was seen extending its declines on Wednesday after the comments from US Treasury Secretary, Steven Mnuchin,who said that the US administration preferred a weaker currency. Mnuchin, speaking at the World Economic Forum in Davos, said that a weaker dollar was good for trade, while also talking about new tariffs and trade pacts.
New Zealand's quarterly inflation data for the fourth quarter of 2017 showed that consumer prices rose less than expected at a pace of 0.1%. This was weaker than the forecasts of a 0.4% increase on the quarter. Annual inflation rate was seen rising at a pace of 1.6% compared to 1.9% previously.
Looking ahead, the ECB's monetary policy is scheduled for today. Markets will be looking to the ECB's statement and Draghi's press conference while expecting to see no changes to the monetary policy. Later in the evening, Japan's inflation data will be coming out. No changes are expected as inflation in Japan is expected to rise at a steady pace from the previous month.
EUR/USD intra-day analysis
EUR/USD (1.2436): The EUR/USD extended gains to post a fresh 4-year high as price action was seen clearly rising above the 1.2300 level of resistance. At the time of writing, the EUR/USD extended gains to trade near 1.2436. The strong gains came on the back of a weaker US dollar. On the 4-hour chart, price action is seen trading near the outer median line which could offer some type of dynamic resistance level. A reversal at this level could signal a near term decline as price could be seen correcting to 1.2281. The ECB's meeting will be the main catalyst for the price action in EUR/USD today.
USD/JPY intra-dayanalysis
USD/JPY (109.02): The USD/JPY closed at 109.20 yesterday marking a fresh 4-month low. The declines could see USD/JPY falling to the previous support level at 108.26 in the near term. The support level help stall the declines. On the 4-hour chart, resistance could be seen forming near the 110.44 - 110.34 region that was recently breached. On the downside, unless we see an intraday bounce, USD/JPY could be seen extending the declines down to the 108.26 level.
NZD/USD intra-day analysis
NZD/USD (0.7380): The New Zealand dollar fell after the release of the quarterly CPI data. However, the declines were limited as the kiwi dollar was seen recovering on the back of a weaker USD. At the moment, NZD/USD is seen trading near the resistance level of 0.7354 level. We expect a potential reversal taking place at this level. Failure to post a higher high from the previous peak could potentially set the stage for NZD/USD to trade flat with the downside risks building up.