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  • Writer's pictureMike Paterson

Markets second-guessing still

Wednesday 17 April 2024

USD demand dominates the FX picture still as Fed Chair Powell warned markets to expect rates higher for longer as did Fed-head Jefferson and USDJPY extended its surge higher to post 154.78 in the absence of any actual intervention from the MOF/BOJ as yet although it still can't be ruled out. Yesterday did see a rapid retreat into 153.80 but then equally rapid move back to 154.50 to keep traders guessing with some consolidation in other pairs too.

UK inflation data this morning came in below last month's reading but slightly above expectations with mixed GBP reaction and markets now pricing in November first cut from the BOE pushed back from September. CB speakers today include  BOE's Bailey, Greene and Haskell, ECB's Lagarde and Schnabel plus Fed's Mester. The Ukraine/Russia war remains pushed back in the world's attention but the increased Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions still cast their own shadow.Remember as always to identify your preferred trading levels and let the algos do their thing along with the natural and speculative flows. Don't get greedy.

Equities are steadier but remain near recent lows amid the Israel retaliation fears as jury remains out but dip buyers lurk still. WTI capped this time at $85.70 before retreating to test $84.25 then capping at $85.25 in the bounce as the second-guessing continues. Gold remains underpinned amid the wobbly risk tones, inflation fear and CB buying and found a base at $2350-60 but a cap into $2400 again as profit-taking continues.

GBPUSD:  Holding 1.2400-10 still with some better risk tones returning and more GBPJPY dip demand but capping at 1.2470-80. I remain a rally seller as we continue to range overall. Some options in play at 1.2500. EURGBP: Failing around 0.8550-55 still but holding 0.8520 in the rapid retreat post-CPI data as the ECB/BOE conjecture continues. GBPJPY: Capped at 192.80 this time after holding 191.80-00 amid better risk tones and underpinned USDJPY but sellers will remain poised in these fickle markets.

EURUSD: Support around 1.0600 still but capping into 1.0650-60 again amid the USD demand and Largarde/others pointing to rate cuts sooner rather than later with June nailed on at the moment. I remain a rally seller as my preferred side. USDJPY: We've now posted fresh highs of 154.78 and remain underpinned after yesterday's hold of 153.80 in the rapid retreat mystery.

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

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