EUR/USD Pair Looks Reasonably Well Supported | The Japanese Yen Galloped Higher In The Morning
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The US dollar fell on Monday as improved market sentiment pushed stocks and riskier currencies up.
The US Dollar Index (DXY) - which tracks the dollar against a basket of six major currencies - fell 0.2% to 104.580
The euro gained 0.4% to $1.06260 , while sterling strengthened 0.7% to $1.22195. However, both remained lower than their levels before last week's central bank moves.
EUR/USD
The EUR/USD pair started trading above $1.06 this week. The technical outlook for the euro remains positive and reasonably well supported. The single currency appreciated against the US dollar
The latest publication of the German Ifo shows that the sentiment in Europe's largest economy "improved significantly" at the end of the year. The business climate rose to 88.6 from 86.4 in November, breaking the index's six consecutive declines, while the expectations reading hit 83.2, up from 80.2 the previous month.
GBP/USD And EUR/GBP
GBP/USD generally trades in the range of 1.2170 - 1.2200 during the day. The intraday high was above 1.2240.
Currently, the cable pair is trading in the range of 1.2170- 1.2180
The British pound crept back toward the previous week's six-month high against the US dollar on Monday, days after the Bank of England (BoE) raised its benchmark interest rate to its highest level since 2008.
The Bank of England made its ninth consecutive interest rate hike on Thursday, raising interest rates by 50 basis points (bps) to 3.5% as the central bank battled double-digit inflation.
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The euro fell 0.1% against the pound to 86.94 pence. The single currency hit a month-high against the pound sterling on Thursday after decisions by the BoE and the European Central Bank (ECB).
ING analysts believe the pound sterling could be vulnerable against the euro, and their target is to move to 89p in the first quarter of 2023.
USD/JPY
The Japanese yen galloped higher amid illiquid trading conditions on Monday morning on news of a possible change in the Bank of Japan's (BoJ) monetary policy targets.
The Bank of Japan currently has a prime interest rate of -0.10% and maintains yield curve control (YCC), setting a range of +/- 0.25% around zero for Japanese government bonds (JGB) for up to 10 years.
The BoJ and the People's Bank of China are the only two major central banks with loose monetary policies. Much of the rest of the world is tightening financial conditions to deal with uncomfortably high and volatile inflationary pressures.
The BoJ meeting will take place tomorrow, but at this stage the market does not expect any changes.
USD/JPY has been in a downtrend since it peaked at 151.95 on the day of the BoJ intervention.
At the end of last week, the price moved towards the upper band of the channel but was unable to sustain the move above it. The downtrend may continue to resist, currently at 137.45.
Looking at the chart of the pair, you can see the strengthening of the yen against the us dollar. The pair returned to trading around $135 but is now trading above $136, meaning the yen's strength was short.
AUD/USD
The uplifting Australian dollar is trading slightly higher against the US dollar this Monday. This comes after China announced its intention to stimulate the economy with loose monetary policy and fiscal support.
Looking at the chart, it is clear that the beginning of the week for Aussie is strong. Comparing to the close, the can pray increased significantly and is now trading above $0.67.
Source: investing.com, dailyfx.com, finance.yahoo.com
