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Talking Forex: EUR/USD Awaits ECB Meeting, USD/JPY On A Downside?

ByTalking Forex
Published 06/03/2013, 05:28 PM
Updated 07/09/2023, 06:31 AM
EUR/USD
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GBP/USD
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USD/JPY
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JP225
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NWSA
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EUR/USD

Much of the attention this week will be on the eagerly awaited ECB governing council meeting, where even though the benchmark rate will likely be left unchanged, there is a risk that the ECB will announce some sort of asset haircut relaxation. So even though those looking for an announcement on the implementation of negative deposit rates will likely be disappointed, the Q&A should provide further indication as to whether the idea is still on the table.

GBP/USD

Unlike the policy meeting by the ECB, the MPC are unlikely to surprise market participants with any unexpected announcements and as such the pair is expected to remain a by-product of the risk on/off sentiment, which has been driven by the news flow out of Japan. In particular, there is a risk that a further slide by USD/JPY would see the pair make a test on the psychologically important 100.00 level, which once tripped may lead to a disorderly, albeit temporary sell-off by the Nikkei 225 index.

USD/JPY

The pair remains susceptible to further downside, which consequently exposes the psychologically important 100.00 level, which once broken risks resulting in a disorganised sell-off by the pair and also the Nikkei 225 index. As such, even if the pair does make a test on the level, there is a possibility that some BoJ of MoF officials will try to support the pair verbally and attempt to discourage further speculation.

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