The second half of this week’s calendar picks up considerably as we get rate decisions from the Bank of Japan on Thursday morning in Tokyo, followed by a European Central Bank meeting that kicks off a bit later in the day. Both Central Banks are dealing with similar issues right now, albeit on far different time-lines, as investors are looking for any clues that they might be able to gleam in the effort of finding out when each Central Bank is going to start to slow-down the massive monetary purchases that have driven each bank’s monetary policy for the past few years.
EUR/USD Sets Fresh 5-Month High Ahead of ECB
In Europe, we’ve already heard grumblings for the potential tapering of QE. The current bond-buying program is set to expire in December of 2017, and the big question is whether or not that gets extended or if the ECB is comfortable-enough to let the program end without some type of replacement. As of yet, we haven’t heard such a strategy from the head of the ECB, Mr. Mario Draghi, and any indication of such at tomorrow’s press conference after the rate decision could drive the Euro-higher. European data has been rather encouraging of recent, alluding to the continued showing of ‘green shoots’ in the European economy that may be signaling brighter days ahead.
EUR/USD put in a bullish-gap over the weekend as risk tolerance returned in a big way after the results of the first round of French elections. After that gap-higher, buyers returned after a quick pull-back to show a ‘higher-low’ at a key level of support around 1.0820, as this is the 50% retracement of the ‘post-Election’ move in EUR/USD. After that higher-low support came-in, a higher-high printed that represented a fresh 5-month high in EUR/USD, and this can be opening the door for further top-side continuation. For traders looking at taking on exposure, that same 1.0820 area could be an attractive area to watch for subsequent support.
