EUR Accelerates its Downtrend, BoJ Defends its Ultra-Loose Policy

Stocks Rebound but Outlook Stays Gloomy; EUR Tumbles to 2017 Levels

The US dollar traded higher against all the other major currencies on Wednesday and during the Asian session Thursday, gaining the most versus JPY, EUR, and NZD in that order. The greenback gained the least versus CAD.

EUR/USD — Technical Outlook

EUR/USD traded sharply lower yesterday, hit support at 1.0515, but today in Asia, it turned south again and moved passed that level. Overall, the pair remains well below the short-term downside resistance line drawn from the high of March 31st, and thus we will consider the short-term outlook to still be very bearish.

BoJ Stays Willing to Support its YCC Policy, Yen Falls

Flying in Asia, indeed, the catalyst for the improvement in risk appetite this morning may have been the BoJ decision. The Bank kept all its policy settings untouched, noting that it will offer to buy unlimited amounts of 10-year government bonds to defend an implicit 0.25% cap around its zero target every market day.

USD/JPY — Technical Outlook

USD/JPY spiked sharply higher during the Asian session today, breaking above 129.00 and coming close to the round psychological number of 130.00. The pair has last tested that zone back in 2002. Overall, USD/JPY has been in an uptrend mode, as market by the upside support line drawn from the low of March 6th. Although it traded temporarily below that line recently, yesterday’s advance brought it back above that line. So, with all that in mind, we will consider the near-term outlook to be overly positive.

As for the Rest of Today’s Events

During the European session, Germany releases its preliminary CPIs for April. The headline rate is forecast to have ticked down to +7.2% yoy from +7.3%, while the HICP one is anticipated to have held steady at +7.6% yoy. This could raise some speculation that Eurozone’s headline inflation rate, due out on Friday, could also stay unchanged, or slide fractionally.

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