News & Data:
EUR/USD declined to fresh multi-year lows ahead of the ECB meeting today. Thought the market is not expecting any new policy announcement from the ECB, it may be perhaps related to QE starting next week. The bank is expected to announce the finer details of its QE programme today, with which it will purchase 60 billion Euros monthly until September 2016. We will also get updated economic forecasts and ECB President Draghi is likely to face questions about the debt financing negotiations with Greece. EUR/USD is currently trading at 1.1060 and the next major support level is seen at 1.10. Dealers report option-related demand ahead of that level, while to the topside, offers are now building in the 1.1140/50 area.
USD/JPY was under pressure yesterday as US stock markets were in the red, but the pair recovered overnight and is now approaching the 120.00 level. While Japanese Government officials expressed concerns about a too weak Yen recently, another wave of USD strength like yesterday is likely to push USD/JPY towards the pivotal 120.80 resistance level. One reason why we are not seeing the pair trading already higher might be cross flows, as leveraged funds were heavy sellers of EUR/JPY and GBP/JPY in the last few trading sessions.