EUR/USD tumbles to lowest in more than 11 years ahead of ECB

EUR/USD opened in Asia at 1.1075 after selling off hard overnight ahead of today’s ECB meeting. Asia was happy to remain sidelined with EUR/USD in a tight 1.1063-85 range with volume again very light. Volatility should pick up later however. When and how the ECB kick-starts its QE program looks to be the focus though some are also eyeing upward assessments to economic forecasts given better recent data, and this prove to be a risk for EUR shorts. Whatever the outcome, the trend remains down and any upticks should continue to provide good selling opportunities.

USD/JPY traded in relatively tight ranges however with many sidelined ahead of tonight’s ECB policy announcement and tomorrow’s US non-farm payrolls report. USD/JPY was better bid, up modestly from 119.62 to 119.90 on some Gotobi demand and modest gains in the Nikkei and relatively high US yields. After the Wall Street sell-off overnight, some were eyeing renewed Nikkei weakness. Foreign buying of Japanese stocks may have been the salve as suggested by MoF flow data for last week. The slew of nearby option expiries helped anchor and bracket USD/JPY. Expiries are strewn throughout the 119-handle and monster expirations are eyed at 120.00 (3+ yards). EUR/JPY and GBP/JPY consolidated overnight losses between 132.55-74 and 182.53-80. AUD/JPY see-sawed between 93.45-86. Comments from RBA’s Lowe that AUD was closer to where it needed to be affected AUD/NZD the most with shorts scrambling for cover. Net NZD sales saw NZD/JPY fall hard from 90.92 to 90.36 in thin trading.

GBP/USD traded soggy in sympathy with EUR/USD between 1.5252-69 and just above yesterday’s 1.5250 low. EUR/GBP treaded water between 0.7254-61, perhaps waiting for fresh reasons to sell.

USD/CHF was bid alongside USD/JPY, up modestly from 0.9631 to 0.9658. EUR/CHF upticked from 1.0673 to 1.0695 before falling back.

AUD/USD opened in Asia at 0.7821 and see-sawed between 0.7804-40. RBA DepGov Lowe allowed for some volatility but no lasting impact except in AUD/NZD which soared from its new record low of 1.0284 to 1.0361. AUD/USD was again capped by good offers at 0.7850. Any stops above look to close-and-yet-so-far.

NZD/USD closed in New York at 0.7590, the highest finish in six weeks. AUD/NZD weakness helped. Asia saw NZD/USD gains unwound as AUD/NZD shorts rushed for cover after comments from RBA’s Lowe. From a tight 0.7580-95 range early, NZD/USD plunged through 0.7580 support to 0.7549.

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