The yen at a 6-year minimum; EUR / CHF bearish bias below 1.0200

Key points of the article:

  • Dollar supported by bond yields, markets await ECB, RBNZ Andt the Bank of Canada
  • EUR / CHF: Below 1.0200, bearish pressure remains predominant

Prejudice

Resistence

Support

Note

AUD / JPY

bullish

97.3

84.54

AUD / USD

Neutral

0.766

0.7245

EUR / AUD

bearish

1.4945

1.4318

EUR / CHF

bearish

1.0402

0.978

Intermediate resistance 1.0200

EUR / GBP

Neutral

0.854

0.8296

Bearish slant in resistance

EUR / JPY

bullish

137.5

133.2

EUR / USD

Neutral

1.123

1.076

Doji

GBP / JPY

bullish

164.6

158.22

GBP / USD

bearish

1.33

1.2845

NZD / USD

Neutral

0.7219

0.6729

USD / CHF

Neutral

0.9472

0.915

Intermediate resistance 0.9375

USD / CAD

Neutral

1.2957

1.245

Bounce on the support

USD / JPY

bullish

125.85

116.36

Dollar buoyed by bond yields, markets await ECB, RBNZ and Bank of Canada

The dollar was still supported this morning, aided by the relentless rise in US yields, while the euro held on, relieved that the far right did not win the first round of the French presidential election.

The Japanese yen suffered the most sales, breaking above the 125 per dollar level. Investors saw little reason to break out of yen expectations as the Bank of Japan keeps yields close to zero.

US Treasury yields, on the other hand, are on the rise. The benchmark 10-year yield gained another seven basis points to 2.77% this morning as the Federal Reserve prepares to reduce its holdings and dramatically raise interest rates.

Nervousness over the economic fallout from worsening restrictions to fight COVID in China also filtered through the markets this morning, with commodity currencies down as well as Chinese equities.

10-year Treasury yields rose above their Chinese counterpart for the first time in twelve years and the yuan fell 0.1%.

The euro was a major winner in Asian trade. The fact that Emmanuel Macron won the first round of the presidential election reassures investors in an area weakened by the war in Ukraine. A win for Le Pen could send a shockwave to France and Europe similar to Britain’s 2016 vote to leave the European Union, and relief from the first round result quickly spread in anticipation of the second. .

Investors are preparing for Thursday’s European Central Bank (ECB) meeting.

The ECB weighed the rise in consumer prices against the pressure on growth caused by the war in Ukraine. It should provide more detail on the gradual reduction in asset purchases, but may not provide explicit guidance on rate hikes.

The US consumer price report, due out tomorrow, is expected to show annual inflation of 8.5%, increasing pressure on the Federal Reserve to act urgently.

Central bank meetings are also scheduled for Wednesday in Canada and New Zealand, and interest rate swap prices indicate that traders are more than 90% likely to see each of them raise rates by 50% basis points.

This could make both currencies vulnerable if a lower rate hike is decided.

Finally, the pound fell after the GDP figures. The UK economy grew 0.1% month-on-month in February 2022, a sharp slowdown from the 0.8% growth recorded in January and below market forecast of a 0.3% increase .

EUR / CHF: Below 1.0200, bearish pressure remains predominant

The euro against the Swiss franc broke a minor support at 1.0200 last week while maintaining a bearish bias. The 13- and 34-period moving averages are in fact declining. The risk is therefore to see the euro return to decline and return to parity.

A return above 1.0200, which corresponds to a Fibonacci retracement of 38.2% and the crossing of the very short-term moving average, would neutralize the negative pressure. However, the important resistance is at 1.0400.

Evolution of the euro against the Swiss franc in daily data:

Forex morning meeting: the yen at its lowest in 6 years;  EUR / CHF bearish bias below 1.0200

Twitter @CDamestoy

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