Psychology for major markets May 29th

EUR/USD – Steady in the mid-1.08s with little movement in yield spreads in spite of some dovish ECB comments on Monday. Mild upside bias remains as long as equities perform well.

USD/JPY – Downside risks persist on declining yield spread and threat of BoJ intervention near 157, but small gains possible in low vol environment as carry trading continues.

EUR/GBP - EUR/GBP dropped below 0.85 on increased ECB talk after Lane dovish comments on Monday, but has recovered back above the figure and break lower looks tough now June UK rate cut has been priced out.

AUD/USD – Pushed higher on better commodity/China sentiment. US yield declines likely to be required for a break above 0.67.

EUR/CHF – Shying away from a test of parity but underlying positive tone remains as long as optimism on European recovery persists.

Equities – Falling back as yields rise in the US and Europe but dovish ECB comments and better European growth data suggests limited downside