News & Data:
EUR/USD initially rallied above 1.11 yesterday as the ECB hiked their growth and inflation forecasts for 2016. However, this simply provided traders with better levels to sell and the pair quickly returned back in the lower 1.10s. The ECB has announced the details of their quantitative easing programme, which will begin next week, but there were no surprising comments or anything similar at yesterday’s press conference. Traders saw this as a sign that the downtrend can resume and added to bearish bets on the Euro. While the negative EUR sentiment is unlikely to change anytime soon, option-related demand could slow down momentum. There are barrier options reported at 1.0950 & 1.09, and there are €4 billion worth of options expiring at 1.10 at today’s NY cut at 1500 GMT.
GBP/USD followed the Euro lower, but had a rather small intraday range yesterday. Price action has been quiet overnight as traders are now looking forward to the NFP release later today. GBP/USD has lost almost 350 pips since last week’s top at 1.5550 and is approaching another pivotal support area at 1.5200/10. A weekly close beneath that area would suggest a move towards 1.50 in the near-term.
USD/JPY gave up some of its gains overnight, as traders did cover some long positions ahead of key US econ data. Good intraday support seen at 119.75, with 119.40 the key short-term support level now. Meanwhile, the Aussie and Kiwi Dollar were able to recover somewhat after a bad day. AUD/USD is back above 0.78, while NZD/USD recovered to 0.75. The price action in NZD/USD looks quite bearish and the sharp reversal after the second failure at 0.7610 suggests further losses are ahead. Immediate support noted at 0.7420 and then 0.7330.