Euro rallies on good data

While equities struggled in the US due to a slide in social media stocks, it was a different story in the FX space as risk currencies really came to life with good gains for the AUD and the euro.

After a mixed reaction to the RBA statement which was largely unchanged bias-wise, AUD/USD climbed along with the euro in European trade as data came in ahead of estimates. Eurozone services PMIs showed a remarkable improvement, while the Spanish unemployment change dropped by much more than anticipated. EUR/USD nudged through 1.39 and ran up to a high of 1.395. In March, EUR/USD traded at a high of 1.397 and this will be the level to look out for in the near term. It is a big week for the single currency with the ECB coming up tomorrow. There will be plenty of positioning ahead of that.

Big week for AUD ahead

AUD/USD broke out of its recent tight range and rallied to 0.937. Some analysts feel the fact that the RBA merely said the AUD remained high by historical standards but removed the ‘uncomfortably high’ phrase allowed the AUD to gain some ground. Today we had March retail sales which came in below expectations. Retail sales showed just 0.1% growth when the market was expecting a 0.4% rise. AUD/USD slipped on the data, but this was short lived and the pair remains elevated at 0.935. There is plenty of volatility still on the way for the AUD with tomorrow’s jobs report and Friday’s monetary policy statement.

USD/JPY testing key support

Meanwhile, USD/JPY dropped a big figure overnight, testing lows in the 101.50 zone. The pair is also testing an uptrend at that level and we really need to see it hold to prevent a further slide. A break of this support could bring 100 back into play. BoJ minutes released this morning didn’t bring anything new, but one member feels a two-year limit on stimulus should be imposed. Janet Yellen testifies before congress today and this could be pivotal for the USD. Yellen likely to be a bit less dovish and give encouraging comments about the economy. This could finally see USD/JPY recover some ground.

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