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EUR/JPY rebounds above 164.50-No one thinks the ECB will cut rates this week

As the prospect of the Fed cutting rates in June gets further pushed into the long grass, the odds of the ECB making such a move then have shortened. The European central Bank is also due to decide on rates this week too, at 1.15pm GMT on Thursday. Very few analysts expect any changes from the ECB this week, and if they were to move this early it would be a major surprise, especially with signs of life emerging across the European economy just now. The EUR/USD is a central component of that ECB policy decision and a further fall would be extremely unhelpful too. That is because it would increase price pressure and that is something the ECB wants to avoid right now. That might explain why the gains for the dollar were short-lived on Friday, when the US jobs data would suggest the US currency should have held those gains. The fact that US yields are higher again this morning and the Euro is no lower is rather perplexing too. The Macro view suggests that is at odds with the fundamentals, but there is a cross currency based reason for that right now and it is all about the EUR/JPY. The rebound in that one on Friday was a clear driver for helping the EUR/USD rebound- there will be more to add on that in due course 

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