The euro has been on a path higher since yesterday morning and we believe much of this is technical. Where the dollar was vastly oversold, the euro was overbought, and the trade was due to come back in.
In a quiet currency session ahead of a busy week of data, the euro grinded higher since bottoming early this morning. The U.S. Federal Budget Balance came in a little lighter than expected and this put pressure on the dollar late in the session. Today was a very quiet inside session for the yen ahead of PPI data tonight at 5:50 p.m. Central.
Thursday's European Central Bank Economic Bulletin was very upbeat calling for a continued expansion of growth “beyond the near term.” Though they did see downside risks due to foreign exchange markets, as expected.
The euro has been moving south at a slow but steady pace since Thursday mornings lower high. The yen finished on the low of the session as equity markets recovered firmly to settle up near the 3% mark.
On the surface of today’s landscape, there truly was not a catalyst the dollar dump. Yesterday, the Fed paved the way for four rate hikes this year. European Central Bank member Coeure implied that a stronger Euro would slow down the ECB’s plan to tighten while encouraging a currency war. U.S weekly Jobless Claims beat expectations.
The euro began picking up off session lows shortly after midnight, trading more than a penny higher; and data out of Japan was mixed last night; Retail Sales, Job Applications and BoJ Core CPI came in stronger while Household Spending fell well short of expectations and the Unemployment rate ticked up.