If market players were looking for a straightforward trade from the US CPI data yesterday, it certainly wasn't the case. But at the end of the day, things settled down in favour of those betting on a toned down approach from the Fed. The dollar dropped as a result and the two notable gainers were the euro and yen.
Both currencies though have other things going for them with the euro also influenced by the rise of EUR/CHF above parity, with the euro area's prospects being not as bad as they were before the winter. Meanwhile, the yen is being heavily influenced by intensify BOJ speculation over potential policy changes next week.
That is contributing to the added fall in USD/JPY today, falling to its lowest levels in over seven months. The break looks set to extend further if you go by the charts but just be mindful of the negative carry that it brings when you take long positions on the yen these days. It was a bit of a shock to me in November (haven't had a negative carry trade in a while), so it's well worth a reminder to those trading the latest break.
Elsewhere, stocks are also pushing the limits of a potential breakout with the S&P 500 running up against key resistance levels as seen below:
We'll see if buyers can claim a break and if so, that will make for a strong argument for risk appetite to pick up in the sessions to follow.
Besides that, gold has also climbed up to touch $1,900 - where buyers had targeted since the start of the year. With bonds staying more bid and yields falling, it could really prove to be a big year for bullion but perhaps the latest upside momentum may need to take a bit of a pause upon hitting said key level for now.
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