Psychology for major markets May 28th

EUR/USD – Steady below 1.09 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. More US yield declines may be required for a break higher.

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

Equities – Asia/Europe extended rally on rate cut and global growth hopes on Monday. S&P has less obvious potential for gains given valuation.