Psychology for major markets Mar 12

EUR/USD – EUR/USD holding above 1.09, but a test lower could be seen if US CPI is strong. 1.10 looking like a bridge too far unless the data is very soft. 

USD/JPY – USD/JPY has weakened significantly as evidence of stronger Japanese wage settlements mounts and markets start to speculate on the possibility of an early BoJ tightening. US data may bring a correction but a sustained rally is likely to require a sharp upside surprise.

EUR/GBP- EUR/GBP supported near 0.85, with softer UK labour market data supporting an upside bias.

AUD/USD – AUD holding near 0.66 supported by generally softer USD tone and resilient equity markets. Potential for renewed gains if US CPI fails to shock.

EUR/CHF – CHF risks still on the downside although EUR/CHF has come off the highs as the EUR has generally softened after the ECB meeting.  More upside still possible as SNB remain one of the more dovish central banks.

Equities – US markets remaining close to all time highs helped by strong corporate earnings, but vulnerable to a decline in easing expectations if CPI exceeds expectations.