Psychology for major markets May 10th

EUR/USD – Edging up towards the high 1.07s after rallying when US yields dipped following FOMC. Upside now favoured especially if recent evidence of European recovery gets further support.

USD/JPY – Downside risks persist on threat of BoJ intervention, despite move back above 155. Move into the 140s possible if US yields hold at lower levels.

EUR/GBP- EUR/GBP holding close to 0.860. More dovish tone to BoE statement after the MPC meeting and lower CPI forecasts suggest good chance of June rate cut, so upside risks given rate cut only half priced in.

AUD/USD – Moved above .66 supported by Chinese data and equities, but fell back from resistance at .6644/50 after RBA meeting. More US yield declines may be required for a break higher.

EUR/CHF – Retreated from the 0.9849 high and stronger Swiss CPI knocked it lower after a retest above 0.98. Stronger EUR/USD and positive Eurozone sentiment required to take it towards parity.

Equities – Regaining momentum after FOMC and payrolls. Risk premia are still low and growth numbers solid, so a further decline in yields could see a retest of the highs.