Home Trading The Week Ahead – Is BoJ laying groundwork for tightening?

The Week Ahead – Is BoJ laying groundwork for tightening?

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EURUSD surges against assertive ECB

EURUSD

As the ECB attempts to curb persistent inflation, the euro is rising. Luis de Guindos (ECB Vice President) stated that the central banks might continue the current rate of rate increases for a time. This tone of hawkishness would help the single currency, at a time where the market thinks that the US Fed is close to reaching its terminal rate. A narrowing rate differential between both sides of the Atlantic could fuel the euro’s recovery. Though Italy’s vitriol against the QT is a reminder of the fragmentation risk as debt service ballooned in peripheral nations. The pair is testing June’s high of 1.0800 And 1.0450 This is the first support.

USDJPY falls on BoJ’s hawkish hope

USDJPY

After the Bank of Japan made an unexpected change to its yield curve control policy, the Japanese yen responded. The central bank allowed traders to hope for normalization next year by allowing more flexibility for bond yields, even though it only referred to it as a technical adjustment. The strong volatility has led to the liquidation of short yen positions. This would be a prerequisite for the currency’s comeback next year, which may coincide with the…



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