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This week, our eyes were focused on whether we would finally see a EURUSD break to the downside and yesterday’s ECB produced a “double tease” of what we identified was the key 1.1300 support without managing a close through that level. Today, the price action backed up again, leaving us none the wiser It appears that the European Central dovish shift was less profound than the market was pricing in and next week’s busy schedule on the Brexit, FOMC and US data fronts arguably has traders defaulting to sitting on their hands in a case where the ECB brought no real surprising shift yesterday.
Elsewhere today, sterling crosses are gyrating, boosted overnight by a story from the arguably dubious Sun newspaper overnight that the DUP might be amenable to May’s deal provided sufficient tweaks were in place on the Irish backstop. The price action reversed, as the EU would also need to be amenable to changing the backstop issue and we certainly still see two-way risk on sterling headlines next week as Parliament will swing into gear on a number of possible initiatives after voting on May’s 'Plan B' on Tuesday.
Finally, as we look at below, SEK is making further noise today on the breakout front – we pointed out NOKSEK yesterday and have a look at EURSEK today – and USDJPY and JPY crosses in general look bid, as enthusiasm for risk appetite has picked up after the mid-week dip. The same goes for EM.
Today’s FX Breakout monitor
Again, EURUSD managed a new 19-day close yesterday but the range key remains 1.1300 on a daily closing basis and today’s price action is so far taking us back away from that prospect. USDJPY is an interesting one on the attempt to close at a new high today – technically the key level looks like 110.00 on a closing basis ahead of a bevy of event risks next week.