ECB remained on hold yesterday as was widely expected and it seems to be the case that it will remain so until the summer of 2019. Yesterday’s interest rate decision was overshadowed by the dovish accompanying statement which stated that the bank does not intend to make any rate hikes until the summer of 2019. On the EUR positives, it should be noted that the ECB announced the gradual tapering of its QE program, starting end of September and with a final wrap up by the end of the year. EUR/USD dropped by some 300 pips scoring the highest losses and we could see the EUR weakening further should it be guided by the decision over the next few days.
EUR/USD dropped heavily yesterday, breaking its sideways motion pattern, as well as the 1.1715 (R1) and the 1.1640 (R2) support levels (now turned to resistance). It continued its drop to test the 1.1550 (S1) support level and stabilised slightly above it. The pair could take a breather after yesterday’s drop and move in a sideways manner today as the financial releases could provide some support for both sides. On the other hand, the market favored USD long positions yesterday and we could see that sentiment provide some bearish tendencies in today’s sessions. If the bears take over again we could see the pair breaking the 1.1550 (S1) support line and aim if not break the 1.1470 (S2) support level. On the other hand, should the bulls be in the driver’s seat, we could see the pair breaking the 1.1640 (R1) resistance level.
- Support: 1.1550(S1), 1.1470(S2), 1.1380(S3)
- Resistance: 1.1640(R1), 1.1715(R2), 1.1820(R3)
BoJ remained on hold at -0.10% as was widely expected. The accompanying statement had a rather neutral to dovish tone as it downgraded its assessment of the CPI and left unchanged the pledge to buy JGB’s at a pace of around 80trl per year. Also, it should be noted, that the bank seems to maintain the JGB 10 year yield target of around 0% and that its inflation expectations are moving sideways. The market did not have much of a reaction on the news as the USD/JPY remained rather stable and we could see the Yen bypassing the meeting in the next few days as a non-event.
USD/JPY rose yesterday breaking the 110.40 (S1) resistance level (now turned to support). The pair could continue to have some bullish tendencies today as financial releases could support the USD side. Should the pair find fresh buying orders along its path we could see it breaking 111.00 (R1) resistance line and aim for the 111.60 (R2) resistance hurdle. Should it come under selling interest we could see it breaking the 110.40 (S1) support line and aim for the 109.75 (S2) support level.
- Support: 110.40(S1), 109.75(S2), 108.95(S3)
- Resistance: 111.00(R1), 111.60(R2), 112.30(R3)
In today’s other economic highlights:
In the European session, from the Eurozone, we get the final inflation rates for May and in the American session, we get the US industrial output growth rate for May, as well as the preliminary US U. of Michigan Sentiment indicator for June.
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