The Euro Ukraine Cease-Fire Rally Has Been Overtaken by Yen Intervention

EURO, EUR/JPY, JAPANESE YEN, BOJ, TREASURY CURVE, FED - CONVERSATION POINTS

• The euro has found its footing, but the yen has received a lift from the central bank in terms of bond intervention.

• Equities enjoy a post-conflict rally, but skepticism and a Fed that is behind the curve loom.

• Where does EUR/JPY stand if this is the start of the BoJ's intervention？

The Euro gained significantly overnight as a result of a likely truce in the Ukraine conflict. European shares were strengthened, and their futures in Asian trading have remained stable.

Except for Japan, the confidence buoyed Wall Street and APAC markets.

Today, the Japanese Yen was an outstanding asset. The Bank of Japan (BoJ) sparked the surge by intervening early in the Japanese government bond (JGB) market across numerous areas of the yield curve.

This fueled speculation that authorities in Japan will take other steps to curb Yen volatility.

Later that day, BoJ Governor Haruhiko Kurado announced a meeting with Prime Minister Fumio Kishida. He argued that the Yen has declined due to increased energy costs and indicated a wish for currencies to fluctuate in a steady manner that reflects economic fundamentals.

These remarks don't say much, but they do herald the start of jawboning intervention, which Japanese officials are well-versed in.

The US 2-10 year Treasury curve reversed during the US session. Every recession in live memory in the United States has witnessed an inversion in that area of the curve in the run-up. As a result, several commentators saw the recent equities rise as a bear market trap.

Former New York Fed President Bill Dudley said that the Fed has now made a recession unavoidable. He went on to add that to reduce inflation, the unemployment rate must rise, and that a recession cannot be avoided.

Federal Reserve speakers Bostic and Harker both made hawkish statements to the press.

The Australian budget did little to impact the Australian dollar, with most details previously reported. Crude oil rallied in Asia on uncertainty about the viability of the Ukrainian cease-fire. After a little dip overnight, gold is holding firm at $1,925 per ounce.

Today sees the publication of a slew of European CPI statistics, as well as a revised set of fourth-quarter US GDP figures and the ADP measure of private-sector jobs. Furthermore, numerous speakers from the ECB, BoE and Fed will be crossing the lines.

TECHNICAL ANALYSIS OF THE EUR/JPY

The EUR/JPY pair paused on Monday near the February 2018 high of 137.501, and this level may continue to provide resistance.

A closure below the 5-day simple moving average (SMA), which is now at 135.249, may indicate a slowdown in bullish short-term momentum.

The 10-day simple moving average (SMA) at 133.774 is barely above two possible support levels at 133.481 and 133.152.