A slow start to the week, with the USD softening a little
The start of the week has seen the USD weakening a touch, though looking across the majors, we see little conviction in trying to push levels into unchartered territory. We get few drivers to direct currency markets from today's schedule, with only NY Empire State manufacturing to note among the releases, and this is not a market mover at the best of times.
As such, we consider today's price action as a series of position testing, and in that respect, the market remains long USDs, with the bulk of the exposure seen against the EUR. EUR/USD has moved cautiously higher so far today. Last week we highlighted the 1.1315-25 zone as a potential resistance point, and we are duly struggling here. A push higher then brings 1.1350-60 into focus. Sellers ultimately enjoy positive carry from short positions here, though with the lack of downside seen in the move below 1.1200 in the past week or so, traders may start to close out shorts.
Cable is trying to follow higher, yet is restrained by EUR/GBP buying. This will dictate where the spot rate goes, but with parliament in recess until after the Easter weekend, we could see the no-news is good news scenario giving the Pound a small boost. 1.3125 needs to be eliminated first.
AUD, CAD and NZD will continue to hold their ground for as long as risk sentiment is buoyed. To that end, JPY and CHF will also remain subdued as a result, with the notable break higher in AUD/JPY a signal of the risk on mode at present.
USD/JPY will continue to battle with the selling at 1.1200-25, though a strong, clear break through 1.1235 could target a move towards 113.00-25.