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EUR/GBP through 0.7700, session highs

The single currency is advancing further at the beginning of the week bolstered by the increasing risk aversion, sending EUR/GBP through the 0.7700 handle.

EUR/GBP firmer on EUR-buying

The renewed selling pressure around the sterling plus the solid sentiment around the risk-off trade is now lifting the European cross to the proximity of 0.7730, trading at shouting distance from YTD tops near 0.7760 seen in late January.

Nothing of note in Euroland in the data space, where the Sentix index has come in at 6 for the current month, missing estimates at 7.6 and down from January’s 9.6

EUR/GBP key levels

The European cross is now advancing 0.44% at 0.7725 and a break above 0.7756 (high Jan.20) would aim for 0.8007 (high Dec.16 2014) and then 0.8041 (high Nov.27 2014). On the other hand, the immediate support aligns at 0.7481 (61.8% Fibo of 0.7310-0.7758) ahead of 0.7310 (low Jan.5) and finally 0.7249 (200-day sma).

The single currency is advancing further at the beginning of the week bolstered by the increasing risk aversion, sending EUR/GBP through the 0.7700 handle…

(Market News Provided by FXstreet)

JPY: What to watch for this week – Deutsche Bank

Taisuke Tanaka, Research Analyst at Deutsche Bank, suggests that the sentiment about whether the USD/JPY rate can stay in the ¥115-120 range has returned to a patient lull.

Key Quotes

“Surprisingly, yen depreciation resulting from the BoJ’s surprise adoption of negative interest rates lasted only three business days. The USD/JPY bullish faction has lost momentum amid weak US indicators and falling equity and oil prices. Also, Japanese banks and investors have been struggling to realign their operations for negative interest rates. Yen-bearish flow is not active yet.

Last week’s closely-watched US employment statistics were a mixed bag. NFPs showed weak growth, but the unemployment rate and wages suggested the robust labor conditions. In the first 3-6 months of the Fed’s tightening cycle, strong indicators for rate hikes as well as weak indicators pointing to future uncertainties tend to trigger nervousness about the USD/JPY. It would be difficult to find any good factors to make the USD/JPY rebound for a while.

UST yields have fallen more sharply than JGB yields around the BoJ’s negative interest rates surprise and are unlikely to signal any trends for the USD/JPY. FRB Chairman Janet Yellen will likely say well-balanced comments on future rate hikes with consideration of global risk-off in her testimony before Congress on 10 February.

Fortunately, risk-off news this week over the Chinese New Year might be fairly scant (although greater attention will be needed next week when the Chinese market reopens). Negative interest rates will actually take effect on 16 February. We intend to carefully monitor how buy-on-dip support for the USD/JPY from Japanese financial institutions and investors can be reinforced.

For the near term, sentiment about whether the USD/JPY rate will stay around 150-120 has returned to a patient lull. In the medium term, for maintaining an uptrend in the USD/JPY rate, the strong US economy remains the most important factor. Our economists have revised down their forecasts for US GDP and changed their forecast for interest rate hikes from three times for this year to once in December. We think the medium-term USD/JPY bullish trend has been reaching a critical stage.”

Taisuke Tanaka, Research Analyst at Deutsche Bank, suggests that the sentiment about whether the USD/JPY rate can stay in the ¥115-120 range has returned to a patient lull.

(Market News Provided by FXstreet)