EURUSD 11-01-2018 Intra-day analysis

Yen extends gains as investors digest BoJ's announcement

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Daily Forex Market Preview, 11/01/2018

The Japanese yen continued to strengthen significantly across the board and investors digested news about the potential tapering. On Tuesday, BoJ announced that it would reduce its bond purchases on the longer term 20 and 40 year bonds. This led the markets to react to the news as a form of tapering from the BoJ. Following through on the gains from Tuesday, the Japanese yen rose 1.07% on the day on Wednesday.

Economic data remained sparse with the exception of the manufacturing and industrial output data from the UK. According to the report from the ONS, UK’s manufacturing output rose 0.4% on the month beating estimates of a 0.3% increase. Industrial output was also stronger, rising 0.4% on the month as expected. Construction output was weaker at 0.4%, missing estimates of a 0.7% increase.

Looking ahead, economic data will shift to the U.S. with the producer price index data expected to show a 0.2% increase on the headline and 0.2% increase on the core. FOMC Member, Dudley will be speaking later in the day.

EURUSD intra-day analysis

EURUSD (1.1945): The euro managed to post gains on the day as the yen’s strength was seen weakening the U.S. dollar. EURUSD rose to a high of 1.2017 before the common currency gave up those gains to settle the day at 1.1947. The rebound in prices saw EURUSD briefly testing the support level at 1.2006 as mentioned in yesterday’s note. The declines could likely resume in the near term as the technical support level at 1.1900 remains yet to be tested. Further gains could be seen coming only on a bullish close above 1.2006 level.


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