ECB in focus but JPY dominating landscape

Thursday 18 July 2024

JPY demand notable again in the past 24 hours with yesterday's move extended through the early European session amid the risk sentiment wobble with USDJPY triggering stops and a further move down to 156.00, possibly with a helping hand from the MOF/BOJ per their recent strategy.

USD supply also prevailing overall but lots of two-way action since including another sharp USDJPY move lower to 155.36 in early Asia after capping at 156.50 but the JPY impact from cross flows has paralysed core pair price action elsewhere as the jury remains out on USD overall. This morning's UK labour report came in a little softer than expected but with real wages still likely to give the BOE something to think about. The latest ECB rate decision/statement arrives today but no cuts expected before August/September. That's providing the Euro with some dip support but markets will hang on to every word in the statement and presser for additional direction.

US and European equity markets have found some dip demand after yesterday's falls but sellers will remain poised. WTI held $79.50-60 and rallied strongly before failing at $82.50. Ever fickle for the moment and expected to range still. Gold retreated amid some profit-taking but holding $2450 and bouncing to $2470.

GBPUSD: A further move to 1.3045 amid the USD supply but with GBPJPY supply helping to temper the rally and we've now seen a retracement below 1.3000 with EURGBP demand returning into ECB. More two-way expected amid the USD and cross flow variables.EURGBP: Holding the decent support at 0.8380-85 that I highlighted yesterday and now up through recent resistance at 0.8410 to post 0.8417 with ECB/BOE rate cut conjecture in play still. GBPJPY: A volatile 24 hours amid the USDJPY moves capping at 204.50 then 203.50 after finding a base at 202.00.

EURUSD: Holding 1.0900 then 1.0920 helped by the USD supply but also some general EUR dip demand on ECB rate-hold expectations. Capping at 1.0947 but holding tight since amid the cross flow dip demand. ECB providing some caution. USDJPY: Finding a base at 155.36 in the last thin liquidity shove lower but now back up through 156.50 as the volatility continues and some general USD demand returns. MOF/BOJ intervention fears remain.

Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk