Currencies

The pair extends this year’s gains as UK headline CPI inflation moderated further in December and the core persisted, while hopes for a Fed pivot continue to create headwinds for the greenback

The volatility for USDJPY increased after the Bank of Japan kept its interest rate targets unchanged. It left its short-term interest rates at -0.1% and the target for its 10-year bond at zero. The BoJ reiterated it will defend the 10-year yield at 0.5%.

The pair set new eight months earlier, but finds support, as markets gear up for Wednesday’s monetary policy decision by the central bank of Japan

The pair is having a good week on expectations of a less aggressive Fed, but loses steam today, as markets brace for the US CPI inflation update that can affect the central bank’s next move

The USDOLLAR is trading in its bear channel, between the lower blue and red bands, ahead of tomorrow’s CPI release. Its RSI is also on the bearish side of 50.

Australian headline inflation printed at 7.3% y/y. This was higher than the expected 7.2% y/y and more than the last months 6.9% y/y. After two months of declines, food prices pushed higher. Poor weather was much to blame and is largely reflected in the increase in fruit and vegetable prices. Motor fuel was another larger contributor up 5.6% m/m (it was also up 7% m/m for October).

Watch today’s US Open for insights on the latest themes driving the markets, the Golden Cross of EUR/USD and more

The hourly chart is bullish. EURUSD’s EMAs have crossed up (black ellipse), as has its momentum based stochastic (aqua ellipse). A movement by stochastic to the 80+ area (blue arrow) will denote an underlying positive momentum. Holding in this area will suggest that the shorter-term traders are aligning with the daily bullish participants.

The pair stays on the offensive after Friday’s rally sparked by the US Jobs report, while forming a potentially important technical pattern

Friday’s job report showed a slowdown in job growth and a moderation in wage inflation. In response, the US 10-year real rate declined, with the greenback following.

Yesterday, the USDOLLAR pushed into its bullish channel between its upper blue and red bands (blue rectangle). The RSI also crossed into its bullish area above 50 (green rectangle). The greenback rallied on the strong ADP data, which pushed the US 2-year yields up around 11bps