EUR/USD under pressure as US yields back in focus
The Japanese yen rose slightly against the US dollar after the Bank of Japan published its long-awaited monetary policy review. In it, the bank said that it will start moving away from the yield curve control program that has put the yield of the 10-year government bond at 0.10% for the past few months. It will also start capping the amount of Japanese shares it buys. These acquisitions have pushed the bank’s ownership of all stocks in the country to 7%. The bank left the quantitative easing policy and interest rates unchanged.
US futures rose slightly today as US Treasury yields cooled. After rising to more than 1.7% yesterday, the yield on the 10-year declined to 1.68% while the 30-year dropped to 2.49%. This performance is mostly because investors believe that the Federal Reserve will soon change its mind about interest rates. In its monetary policy decision on Wednesday, the bank said that it will continue with the asset purchase program and leave rates intact even as it boosted its economic outlook.
The economic calendar was relatively muted today after having a busy week. This week, many central banks, including the Bank of England, Bank of Japan, Fed, Norges Bank, and the Turkish Central bank all made their decisions. Most of them left rates unchanged while emerging market banks like those from Brazil and Turkey made surprise hikes. Meanwhile, the price of crude oil made a smaller rebound after dropping by more than 7% yesterday.
The EUR/USD pair is under pressure as traders continue watching the yield market. It dropped to 1.1900, which is substantially below yesterday’s high of 1.1990. It is also slightly below the upper side of the bullish flag pattern that formed earlier this week. It is slightly below the middle line of the Bollinger Bands. Therefore, the pair may keep falling as bears target the lower side of the channel at 1.1881.
The XTI/USD price declined sharply yesterday as the market worried about demand. It fell to 58.23, the lowest level since February 15. Today, it bounced back to 60.95 but it is also below the fractal adaptive moving average. The Average True Range (ATR), which is a good measure of volatility, has also risen to the highest level since last week. Therefore, the pair may still resume the downward trend as bears target the lowest point today at 58.23.
The USD/JPY price retreated after the relatively hawkish Bank of Japan decision. It declined to an intraday low of 108.60, which was the lowest it has been since March 18. The pair has also moved below the ascending trendline while the Stochastic oscillator has moved slightly above the oversold level. Therefore, the pair may keep falling in the near term.