Market News

Daily Finance News Update

USD/JPY and EUR/USD on the radar

June 10, 2021 10:39:52

“Super Thursday” has finally arrived with the release of the latest US CPI data plus the ECB meeting, with the press conference slated to start at the same time as the release of the inflation figures. Hopes are high that we get a bout of volatility to spice markets up after the slow start to the week.

USD/JPY uptrend intact

The major most sensitive to the US inflation numbers should be USD/JPY with the yen side highly correlated to US rates and bond yields. The annual reading is expected to tick higher to 4.7% from 4.2% in April while the core is set to rise to 3.5% in May from 3% in the prior reading.

If we see a higher reading, then there should be a kneejerk reaction with the dollar and yields going higher, especially having fallen so far this week. USD/JPY needs to get above last week’s high at 110.33 if it is to get anywhere near the cycle highs at 110.96. But the market has now gotten used to the fact that the Fed is looking through these base effects and supply chain issues so the price move maybe short lived. A softer print will be seized upon and send the pair lower, with support at the 50-day SMA around 109 where the short-term bullish trendline resides. If this gives way, then late May support comes into play around 108.56.

EUR/USD waiting for taper talk

ECB officials have already stated there may not be any taper talk at today’s ECB meeting, even allowing for the expected upgrade in their growth forecasts. If this happens, then the press conference will be where President Lagarde earns her corn and doesn’t get tied in a taper talk tongue twister.

If she doesn’t repeat the on hold message of the last few weeks and bows to hawkish pressures to mention possible future reductions in bond buying, the euro will go bid. The risks are skewed this way as consensus is for a dovish message. EUR/USD needs to beat yesterday’s spike high at 1.2218 before it can head towards the May 25 peak at 1.2266. Strong near-term support lies at 1.21 if taper talk is shut down completely, though Lagarde will have to go some way to be overtly dovish at this point indicating major downside risks.

Jamie DuttaAnalyst / Trader

"With extensive experience as a full time trader and financial market commentator, I have worked as a trader in top tier investment banks and trading houses, including Morgan Stanley and GAIN Capital trading Forex, Index derivatives. and Bonds. I combine technical analysis with a deep fundamental knowledge to identify trade set-ups. My real life experience allows me to break down the complexities of financial jargon and trading. This means everyone can better understand the compelling forces of greed and fear which are realised every day in countless ways across markets."

Moneta Markets does not represent or warrant that the material provided here is accurate, current, or complete, and therefore should not be relied upon as such. The information provided here, whether from a third party or not, is not to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any financial instruments; or to participate in any specific trading strategy. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. We advise any readers of this content to seek their own advice. Without the approval of Moneta Markets, reproduction or redistribution of this information is not permitted.