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Forex Flash: What lies ahead of EUR/USD? – BTMU, Commerzbank and Danske Bank

FXstreet.com (Barcelona) - The shared currency is trading on the back foot on Thursday, dragged to session lows around 1.2780 after softer-than-expected services PMI prints in the euro area. The ECB will hold its monthly gathering later, although no modifications are expected to its monetary policy.

“We still expect the ECB to cut but today is premature and today could be more about Draghi reassuring the markets that progress is being made”, suggested Derek Halpenny, Analyst at BTMU.

In addition, Karen Jones, Head of FICC Technical Analysis at Commerzbank, commented, “EUR/USD is consolidating below its 200 day ma and resistance line at 1.2892/1.2912, and while capped here a negative bias is maintained”.

“With net positioning now closing in on stretched territory for the euro, we stress, however, that should the ECB refrain from a cut (our base scenario), euro upside could certainly be in store, as investors would be likely to be ready to cover shorts and/or add longs”, remarks Christin Tuxen, Analyst at Danske Bank.

Forex: EUR/GBP recovers from morning plunge pre BoE and ECB

EUR/GBP has had a volatile session, posting a weekly high this morning before falling sharply and recovering again.
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Forex Flash: BoJ leadership paints broad strokes – UBS

The Bank of Japan, under its new leadership, took a bolder than expected step into the realm of aggressive easing overnight. First it switched to a new monetary policy framework and is now targeting the monetary base rather than the overnight call rate. According to Research Analyst Gareth Berry at UBS, “This takes policy back to how it looked during the QE experiment of 2001-2006 when the level of current account balances at the BoJ became the policy target. Second, Rinban operations and the JGB component of the Asset Purchase Program were folded into a new purchasing program with the authority to buy all along the JGB curve - even out to the 40y point.”
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