EUR/USD struggles below $1.24

USD/JPY opened the Asian session at 117.85 after a relatively quiet Friday, as EUR/JPY selling offset broad USD strength. The Tokyo holiday today ensured limited flows and the range for the morning was 117.58/97. USD/JPY traded up to 117.97 in early Asia before steadying at 117.75 heading into the afternoon session. USD/JPY trend higher is still in place but showing some signs of exhaustion. EUR appears to be the favoured selling currency now and the Japanese election might provide the excuse for paring back of long USD/JPY positions.

EUR/USD opened the Asian session at 1.2380 after selling off Friday due to the dovish comments from the ECB’s Draghi that resulted in the market pricing in full blown QE sometime in the first half of 2015. EUR/USD dipped to 1.2359 in early Asia before steadying around 1.2396. EUR/USD sentiment has turned bearish again, as the divergent c/bank expectations between the ECB and Fed are growing more extreme. The market consensus is the ECB will have to resort to sovereign bond buying – as the other programs aren’t enough to fulfill Draghi’s pledge to do what is necessary to underpin inflation.

GBP/USD traded a 1.5633-62 range in Asia on Monday; last at 1.5661.

USD/CHF traded a 0.9703-32 range in Asia on Monday; last at 0.9705.

AUD/USD opened Monday at 0.8669 and traded a modest 0.8665-0.8700 range in Asia; last at 0.8685. It was a low key affair due to the Tokyo holiday with players’ content to wait on the open of Chinese markets to see how their equity markets responded to Friday’s (after China market close) PBOC 40bps rate cut. Chinese investors cheered the move with the Shanghai Composite up 1.8% and at 3-year highs. The property sub-sector (where the rate cut was aimed) rallied a whopping 5.3%. In currencies however it was pretty ho hum stuff to start the new week. AUD/USD crawled higher to test 0.8700 before pulling back slightly.

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