Currencies Range After Dollar’s Rise

The EUR/USD is ranging right now amid German CPI data that met expectations. This lack of activity is likely to continue in the hours leading up to the European Central Bank Monthly Report at at 08:00 GMT. At this time, we may get a better idea of the ECB’s plans and thoughts regarding anemic growth in the Eurozone – sentiments that may inspire more movement. In addition, the US Federal Budget Balance report will come out at 18:00 GMT, meaning we could also seem some movement in the evening. In the meantime, look for support at 1.2858 and resistance at 1.2960.

The USD/JPY continued rising during the Asian session today despite better than expected Japanese manufacturing data – which only slowed the pair’s climb temporarily. Much of this movement within the past few days has been due to monetary policy divergences between the US and Japan. The US Fed is undertaking steps that strengthen the dollar such as planning to raise the interest rate and ending its stimulus program. The Bank of Japan, on the other hand, is actively printing money in order to reach a 2% inflation goal – an action that keeps the yen from appreciating. Thus, the pair faces upward pressure from two sources in the longer term. For now, there may be a slight retracement or some ranging ahead of US data, though bullish forces will still remain active in the long run. Look for support at  104.67 and resistance at 107.03.