EUROPEAN session review: Euro fell after Drgahi’s comments

Data released: 

06:00 GMT Switzerland Trade Balance (Mar) 2050M 2,139M 2295M 

06:45 GMT France Business Climate (Apr) 100 100 101 

08:00 GMT Germany IFO - Business Climate (Apr) 111.2 110.5 110.7 

08:00 GMT Germany IFO - Current Assessment (Apr) 115.3 115.7 115.2 

08:00 GMT Germany IFO - Expectations (Apr) 107.3 105.8 106.4 

Euro weakens after Draghi’s speech. Today Head of ECB Mario Draghi said that the exchange rate is not a policy target but that a further strengthening of the euro could provoke more easing. 

ECB head also suggested that if the medium-term outlook for inflation deteriorated, the central bank could initialize broad-based asset purchases. 

Draghi said that the Governing Council was discussing the possibility of publishing minutes from the monetary policy meetings as well as changing the frequency with which the meetings are held. 

EURO 

German IFO results boosted the euro to session highs, with Expectations (107.3) and Business Climate (111.2) surpassing expectations at 105.8 and 110.5, respectively for the month of April. 

Next on tap in the euro area will be the speech by ECB’s Mario Draghi, with market participants looking for clues and mentions of the exchange rate. 

EUR/USD holds around $1.3820 with initial resistance comes at $1.3850 (Monday’s high), then - at $1.3900 with a break above targets $1.3965 (Mar 13 high). Below $1.3800 minor support comes at $1.3740 (Apr 8 lows), extending to $1.3670 (Apr 4 lows). 

POUND 

The UK currency holds steady as there is no key national report for today. 

GBP/USD back to $1.6800 with $1.6840 still may resist the bulls. Further resistance comes at $1.6880 (Nov 15’2009 high). Support is near $1.6780, below - at $1.6700 and around Tuesday’s lows on $1.6660 with a break under widens losses to $1.6620 (trend support line from Nov 12’2013). 

YEN 

The yen strengthened versus the dollar on speculation data tomorrow will show Tokyo inflation quickened the most in more than two decades, dimming prospects the Bank of Japan will expand stimulus. 

USD/JPY holds within the Y102.10-Y102.70 range (initial support/resistance respectively). Further resistance comes at Y103.40 and around Y104.00. Stronger one remains at Y104.30/80. Support comes at Y101.30 (Apr 10 lows). Below support comes at Y100.70 (Feb 7 lows). 

DATA AHEAD 

US data include Mar Durable Goods Orders at 12:30 GMT (median is 2.0% versus 2.2%). 

Later in the evening (at 23:30 GMT) Japan reports Mar National Consumer Price Index.

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