Japanese Yen’s decline continued in today’s Asian session, with USD/JPY breaching 160 mark amid notable absence of comments from Japanese officials, as the country is on holiday. While some profit-taking has occurred due to concerns in guard of intervention, traders seem poised to push the pair beyond 160 if Japan remains inactive.
Simultaneously, Australian Dollar rises broadly, supported by ongoing rebound in Hong Kong stocks and growing domestic debates over whether RBA should implement another rate hike. With the current interest rate at 4.35%, some analysts believe it may not be sufficient to adequately address inflationary pressures.
AUD/JPY is currently the top mover for April, up more than 5.7%. Technically, a focus now is whether 100% projection of 86.04 to 97.66 from 93.00 at 104.62 would cap upside in the near term. Break of 102.98 support will suggest that near term consolidation has started. Nevertheless, decisive break of 104.62 will pave the way to 138.2% projection at 109.05.
In the long term picture, momentum in AUD/JPY remains strong as seen in M MACD. The strong break of trend line resistance is another bullish sign. AUD/JPY might be ready to break out of from range through 107.88 (2007 high) to 61.8% projection of 59.85 to 99.32 from 86.04 at 110.43.
ECB’s Wunsch: Successive rate cuts in Jun and Jul could trigger excessive repricing
ECB Governing Council member Pierre Wunsch expressed today that he is “very comfortable” with rate cut in June. He also anticipates that at least two rates cuts this year, “barring any bad news”.
However, Wunsch was careful to temper expectations regarding the pace of future rate cuts, particularly stressing that a reduction in rates in July, following a potential June cut, is “not a done deal”.
He highlighted the importance of “managing expectations,” noting that too rapid a sequence of rate reductions could lead the markets to anticipate cuts at every ECB meeting. Such a perception could trigger an excessive repricing in the markets, which Wunsch views as problematic.