FOREX: PMIs Trigger EUR Squeeze, Showing Sensitivity to Good News
Jan-24 10:11
- USDJPY moved higher during the BoJ press conference at which Governor Ueda noted that the board has no preconception on the pace of rate hikes going forward - helping keep USD/JPY contained above the post-rate decision low. This keeps initial resistance at 156.82 (50.0% retracement of the Jan 10 - 21 bear leg) firmly intact.
- EUR is holding a post-PMI rally, with EUR/USD briefly topping the $1.05 handle for another YTD high. There's still a way to go before revisit post-US election highs ($1.0630 the level here) but we're seeing strong participation in the rally this morning, evident in EUR futures volumes being close to 80% above average for this time of day, and on track for the busiest session of the week so far. We see the technical break in EUR this week signalling scope for further strength - with 1.0574 marking an important retracement point, and the next hurdle before post-election highs.
- Cross-selling of USD vs. particularly the EUR and GBP has pressured the greenback this morning, with added weight on the currency coming alongside Trump's comments overnight, in which he stated that he would "rather not" put tariffs on China, although retained the option of doing so. The potential softening in stance has helped support risk, with stock futures trading generally firmer in Europe.
- The schedule ahead sees prelim US PMI numbers for January cross, ahead of both the final UMich sentiment read and existing home sales. There remain no Fed speakers on the schedule given the pre-decision media blackout period.
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