Yen Holds Ground vs USD, Sterling Weak

Yen Holds Ground vs USD, Sterling Weak

“We therefore continue to view any pullbacks in EUR/USD as corrective, with support coming from the November bullish daily trendline currently at 1.3280. We expect EUR/USD to rally to 1.3800 by the end of Q1,” he said.

Against sterling, the euro touched a two-week high at 86.85 pence. Investors gave the pound a wide berth partly on growing speculation the UK could soon lose its prized triple-A credit rating.

The market was also waiting for minutes of the Bank of England’s latest policy meeting, looking for signs on whether policymakers will continue to tolerate above-target inflation and a weaker pound.

(Read More: Inflation is Coming: Bank of England)

Sterling traded at $ 1.5424, having plumbed a seven-month low at $ 1.5414 in New York.

Commodity currencies like the Australian and New Zealand currencies fared much better, with the Aussie dollar popping back above $ 1.0300. Still, it remained contained a slim $ 1.0200/0400 range seen for most of this month.

Christopher Vecchio, currency analyst at DailyFX said a fall below $ 1.0260/70 would be needed to confirm a breakdown. “With the downtrend swing highs coming in at $ 1.0460/80, our bias remains bearish against this zone. A break above implies a rebound back towards the highs above 1.0600.”

Partly supporting the Aussie, minutes of the Reserve Bank of Australia February 5 policy meeting out on Tuesday suggested the central bank was in a wait-and-see-mode, rather than seeking to actively cut interest rates.

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