Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/USD ahead of the ECB meeting, so be sure to check that out to see if there is still a potential play!
|Equity Markets||Bond Yields||Commodities & Crypto|
|DAX: 12461.18 -0.21%
FTSE: 6365.16 -0.27%
S&P 500: 3126.10 +0.10%
DJIA: 26339.94 +0.29%
|US 10-yr 0.815% +0.051
Bund 10-YR -0.318% +0.032
UK 10-YR: 0.312% +0.039
JPN 10-YR: 0.028% +0.02
|Oil: 36.83 -1.23%
Gold: 1711.30 +0.38%
Bitcoin: 9747.96 +1.48%
Ethereum: 244.25 +0.50%
Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar for U.S. & Asia:Australian Services Index at 10:30 pm GMT
UK Consumer confidence at 11:01 pm GMT
Japan Household spending at 11:30 pm GMT
Japan Leading Economic index at 5:00 am GMT (June 5)
What to Watch: EUR/JPY
EUR/JPY hits the top of the watchlist today thanks to the volatility sparked by the latest monetary policy statement from the European Central Bank. The ECB announced that the would increase the emergency bond-buying program (PEPP) to 1.35T euros, way above the 500B euro expectation, and extend the duration to the end of June 2021.
Obviously a positive for the European economy, it makes sense that euro bulls are maintaining control, which could last for the rest of the session with no other major catalysts expected.
In terms of price action, EUR/JPY has been in a solid rally higher since early May, picking up steam recently after the EU’s plan to borrow 750 billion euros to aid economic recovery last week. So, the trend is in favor of the bulls, but the pair is up against a potential resistance area, marked at 122.86 on the chart above, which was the January highs.
For the bulls, a break above that level is a strong signal that euro bulls aren’t going to back down, at which point consider a long at market or a scale in long entry strategy from 123.00 down to 122.50.
With a daily ATR of around 100 pips, targeting the 124.00 125.00 area makes sense for a potential short-term gain before the end of the week, or a longer-term swing trade plan could be made, given that this breaks the longer-term falling ‘highs’ pattern on the longer-term charts.
For EUR/JPY bears, the argument is pretty slim at the moment for a short-term short play on the pair. If global risk sentiment sours big time, then maybe there’s a play if we see the pair break below the 122.00 handle. But that’s a very low probability scenario at the moment.