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  • Writer's pictureMike Paterson

Focus back on geopolitical tensions

Monday 15 April 2024

Saturday night's drone and ballistic missile attack on Israel by Iran was duly thwarted given the advance warning given but the questions remain on what happens next. Markets have breathed a small sigh of relief with Iran saying mission completed for the moment but Israel threatening retaliation despite Allies pleading otherwise. Peacock-suiting maybe but the tensions will remain.

Greenback grabbing continues and more noise overnight from the Japanese MOF/BOJ but it's still just noise. Intervention fears will persist but no evidence of it as yet and USDJPY continues its climb higher to look at 154.00 albeit with JPY demand tempering rallies amid the fragile risk tones. Some dovish tones from ECB's Simkus this morning looking for at least 3 rate cuts this year.

The Ukraine/Russia war has been pushed back in the world's attention but concerns there and the increased Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions still cast their own shadow as I've been warning for a long while now sadly.Remember as always to identify your preferred risk reward levels and let the algos do their thing along with the natural and speculative flows. Don't get greedy.

Equities retreated again on Friday amid the Iran retaliation fears but are currently off their lows and steadier in early European trading as immediate threat passes and jury remains out. WTI traded higher on Friday amid the Middle East unknowns but capped this time at $87.00 before retreating to test in the relief-led aftermath as the second-guessing continues. Gold retains its allure amid the wobbly risk tones and spiked to new record highs of $2430 on Friday but profit taking has seen a sharp reversal down to $2335 and a cap at $2365-75 since.

GBPUSD: Capped around 1.2560 helped by some GBPJPY supply and an extended retreat amid the USD demand too but holding 1.2420-30 with some better risk tones returning and renewing GBPJPY dip demand. I remain a rally seller. EURGBP: Failing around 0.8555 but holding 0.8525-30 as the ECB/BOE conjecture continues.

GBPJPY: Good two-way business again amid the variable risk appetite. Capped at 192.50-60 still but holding 190.00 in the extended retreat before testing 192.00 as I type. Sellers will remain poised but some caution still required amid the fickle markets.

EURUSD: Support around 1.0620-30 in Friday's extended retreat after capping into 1.0700 amid the USD demand and fragile risk. I remain a rally seller as my preferred side. USDJPY: We've now posted fresh highs of 153.94 and remain underpinned after Friday's risk-off retreat held 152.60.

Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email

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