Technical: euro steady as risk asset prices diverge ahead of ECB and BoJ meetings

The euro has started the week on solid footing as the US dollar slipped on perceptions that the Fed rate hike path might have peaked in expectations.

Through the Asian session we have seen most equity markets go lower while growth and commodity linked currencies moved north. Japan equities were the exception, with small moves into the green.

The Australian dollar got a boost from RBA meeting minutes revealing their hawkishness prior to very strong domestic data released since that meeting. The Kiwi went along for the ride while the Loonie and NOK were less enthralled.

Commodities continue to be whippy in the aftermath of Russia’s Gazprom calling force majeure on some of their European gas customers.

Yesterday’s surge in crude oil has mostly remained intact, with the WTI futures contract trading above US$ 102 today and the Brent contract approaching US$ 106 again.

Gold continues to languish near US$1710 an ounce. Treasury yields remain benign, with the two to ten year part of the curve inverted by around 18 basis points.

Treasury International Capital (TIC) data released overnight showed China’s holdings of Treasuries fell below US $1 trillion.

There have been some reports emerging out of China that mortgage holders there might have a grace period on repayments and that builders could get funding to finish existing projects.

Looking ahead today, after UK jobs data, Eurozone CPI data will be released. Later in the week, the focus will remain on the ECB and BoJ monetary policy meetings on Thursday.

EUR/USD technical analysis

EUR/USD has rallied back through parity and crossed above the 10-day simple moving average (SMA) which might suggest a pause in short term bearish momentum.

The 21-day remain a long from the price, currently just below a potential resistance zone at 1.0340 – 1.0360.

The descending trend channel remain intact and all SMAs maintain a negative gradient. Support might be at the weekly close 1.0008 or at last week’s low of 0.9952.

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