Greenback loses some flavour

Thursday 4 April 2024

Seems my attempt to anger the FX gods yesterday by saying someone had pressed the pause button got its due response and a combination of some softer US data, Fed Chair Powell and bond yields off their heady highs has seen some USD supply returning.

The recent ultra tight ranges have broken albeit with USDJPY proving stubborn amid some JPY supply returning but still prone to Japanese verbal intervention and keeping a lid on things at the key 151.80-00 area again. Everything is relative and for me little has really changed but in these days of tight ranges and second-guessing the move is notable but nothing more than a re-adjustment of some myopic USD demand in recent times.

Swiss CPI came in under expectations this morning and produced some more CHF supply. Eight Fed heads speaking later today with US NFPs looming tomorrow as markets will continue to second-guess.The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions still cast their own shadow.

Equities have rallied again after another sharp retreat in NY while WTI has capped at $85.80 then $85.40 but the second-guessing on Red Sea/Gaza, CBs and global economy will continue as we head back down through $85.00. Gold has risen yet again to post fresh record highs of $2304 as the shiny stuff retains its allure but capping as I type.

GBPUSD: A good hold of 1.2550-60 then 1.2600 yesterday before breaking up through 1.2630-40 amid the USD supply and GBPJPY demand triggering a few stops to test 1.2670. I remain a rally seller.EURGBP: Sellers prevailing at 0.8585 this time but holding 0.8555-60 still amid the ongoing ECB/BOE rate cut conjecture. GBPJPY: Base formed yesterday at 190.80-00 then 191.50 amid the GBP/JPY demand returning on better risk tones but capping at 192.20 atm. Sellers will remain poised but some caution required for the moment.

EURUSD: Support around 1.0780 and a break up through 1.0830 amid some general EUR demand still and the renewed USD supply and posting 1.0859 as I type. I remain a rally seller as my preferred side.USDJPY: Duly capping around 152.00 still but holding 151.50-60 amid the renewed JPY supply. I still prefer to play from short-side but still expecting dip demand for the moment.

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