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  • Writer's pictureMike Paterson

Jury still out

Tuesday 25 April 2023

The Central Bank conjecture continues with the latest policy decisions from BOJ later this week and FOMC next week looming ever closer. Throw in some 50bps rate hike talk from the ECB again too and the second-guessing continues. We can't rule out a hawkish surprise in some form from the BOJ even if UEDA is keeping his cards very close to his chest.

Yesterday brought some USD supply that's seen EURUSD take full advantage helped by EURGBP and EURJPY demand and underpinned by hawkish ECB expectations. GBPUSD failure above 1.2500 and USDJPY holding 133.80-00 again means the jury still out though. Early month-end signals suggest a fairly balanced USD position too but EURJPY demand is cited as one highlight and that's something to keep in mind amid the risk off retreat this morning.

Equities are in retreat once again this morning after a couple of attempts to rally yesterday while WTI has capped above $79.00 this time breaking back up through the $77.50 pivot area as we continue to range.Gold continues to trade tightly within a $1970-2010 range despite the genberally amid talk of CB selling to cover debts elsewhere. Ukraine/Russia war continues to be the main geo-political elephant in the room with ongoing US/China/Taiwan tensions in the mix too and now ongoing Middle East tensions and turmoil in Sudan escalating.

Remember, focus on the price action and let the algos do the heavy lifting/dropping amid all the second-guessing. The important thing is to identify your preferred risk/reward entry/exit levels prior and be poised to execute.

GBPUSD: A steady climb yesterday and breaking up through 1.2450-60 amid some USD supply but rally tempered by ongoing EURGBP demand (as I warned yesterday) and capping above 1.2500 again helped lower this morning by the risk-off GBPJPY supply as well. Some pips banked in the latest retreat on Friday. Rinse n repeat while we range and I remain a rally-seller on this pair overall. EURGBP: Duly holding 0.8825-30 yesterday where I warned that we had that decent option interest and underpinned further by the general ECB hike-led demand. 0.8860-70 capping though atm so expect more two-way business still overall. GBPJPY: Capping into 168.00 this time as risk tones soften and the jury remains out.

EURUSD: Finally breaking 1.0980-00 yesterday amid the softer USD tones and general EUR demand but failing above 1.1050-60 where we also have decent option interest today. I remain a rally seller as my preferred side overall. ECB conjecture continues. USDJPY: Capping yesterday at 134.75 after a decent rally with some EURJPY demand notable and better risk tones but retreating back to test 133.80-00 as risk softened. Pips gratefully banked and I continue to favour rally sells overall with hedges elsewhere. BOJ casting a shadow still.

More detailed analyis across a vriety of pairs from

Interbank rates: 07.56 BST

GBPUSD 1.2477

EURUSD 1.1047

EURGBP 0.8853

GBPEUR 1.1293

USDJPY 134.40

GBPJPY 167.71

GBPCAD 1.6895

GBPCHF 1.1048

GBPZAR 22.6940

GBPHKD 9.7063

USDCHF 0.8883

EURCHF 0.9810

EURHKD 8.5897

AUDUSD 0.6674

NZDUSD 0.6167

USDCAD 1.3560

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