US Markets

BUZZ-COMMENT-US recap: EUR/USD keeps post-ECB losses through Biden tax kerfuffle


The dollar gained ground after jobless claims data [nAQN042PVA] revived the narrative of a rapid U.S. pandemic recovery and the ECB's slightly dovish commentary following Thursday's meeting.

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April 22 (Reuters) - The dollar gained ground after jobless claims data revived the narrative of a rapid U.S. pandemic recovery and the ECB's slightly dovish commentary following Thursday's meeting.

News that President Joe Biden will propose almost doubling the capital gains tax rate for wealthy individuals, according to Bloomberg , yanked stocks and Treasury yields off their highs, which affected the dollar index little but hurt risk sensitive currencies such as the Australian dollar.

EUR/USD fell back below 1.2000 after a post-ECB meeting attempt to reach April's 1.2080 high from Tuesday imploded. The placeholder ECB meeting and President Christine Lagarde's press conference initially prompted buying due to talk about growth being expected to rebound quickly .

But hawkish speculation regarding Pandemic Emergency Purchase Programme tapering was dashed , prompting EUR/USD's fall.

EUR/USD's April rally will become vulnerable if it closes below 1.2000 after failed attempts to clear the daily cloud top this week , with next supports near 1.1950.

Sterling fell 0.7% versus the dollar and 0.65% against the yen, on pandemic concerns, particularly in India , and mixed CBI data .

Cable broke below Wednesday's 1.3886 low, as well as the 55-day moving average and the daily cloud that it had rallied beyond on Monday. Monday's high was rejected by the 61.8% Fibo of the February-April fall and the underside of the broken up trend-line from November, the second such bearish rejection this month.

USD/JPY rose marginally, with the haven dollar and yen both in demand. USD/JPY's April slide stalled just above the 38.2% Fibo of 2021's advance at 107.77, with some help from the daily cloud, 55-DMA and the up trend-line from January's trend low, Friday at 107.74.

Upside looks limited by the broken 23.6% Fibo and next week's largest options expires at or below 109, top-heavy weekly charts and hefty spec long positions taken above 108.50.

Neither the Fed or the BOJ are seen shifting policy at their meetings next week. Treasury-JGB yield spreads remain largely U.S. data-dependent. Ten-year yield spreads have bullishly diverged from the falling USD/JPY this week, but the burden of proof remains on bulls .

AUD/USD fell back as the dollar rebounded and commodity and equity prices receded, so far finding support near the daily kijun at 0.7691 after Tuesday's ill-fated breakout above the daily cloud top toward March's recovery high.

USD/CAD's post-hawkish Bank of Canada meeting dive on Wednesday came to a screeching halt.

Ethereum surged to a record high, leaving bitcoin in its wake and closer to last week's 23-day lows.

The main data focus on Friday is April PMIs.

For more click on FXBUZ

(Editing by Burton Frierson Randolph Donney is a Reuters market analyst. The views expressed are his own.)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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