USD Resumes The Upside After Early Week Losses
We have seen a return of the USD today, though, in essence, the price action seen through Monday perhaps sowed the seeds for a fresh move higher today. Given that the focus turns to US inflation amid fears that an overshoot the Fed to speed up the size and pace of rate increases (beyond 2018 we assume), traders are rebalancing the major exchange rates, notably EUR/USD and USD/JPY.
EUR/USD has now moved back under the 1.1700 mark, though has a long way to go before it meets any meaningful support seen ahead of 1.1500. 1.1590 or so was the last major dip we saw here, yet despite some very poor survey data from the ZEW this morning, downside momentum at the very least, has been lacking. 1.1680-85 has seen some light bidding interest coming in so far, though activity has been pretty light in the absence of any clear drivers for the USD. Later on this afternoon we get the latest job openings - which was a favoured metric by the previous Fed chair Yellen - and could suggest wage pressures building up if vacant positions are found hard to fill.
USD/JPY has been the lead play, however, with strong earnings reported in the US and pointing to fresh gains on Wall Street. The spot rate has now cleared the 111.00 level again and has designs on testing weekly trend line resistance just above the 111.50 mark. 111.35 is the session high as yet, so is worth watching closely once the cash equity markets open in a little over an hour and a half.