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  • Writer's pictureMike Paterson

More of the same

Tuesday 20 February 2024

FX pairs continue to range tightly as the Greenback/Fed/Central Bank jury remains out and in the wake of yesterday's US holiday. Overnight the PBOC cut its 5-year Loan Prime Rate by 25bps to 3.95%, the biggest cut in its history and will remain on a dovish path to stimulate the Chinese economy, but they've got a job on their hands for sure.

The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions are all still casting their own shadow. While all the uncertainty remains, both economical and geopolitical, remember 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 or over-analyse.

Equities remain underpinned overall still despite a small retreat yesterday and on the rise once again as European trading gets underway. WTI has risen again to test $78.50-60 after holding $77.50-60 with dip demand still on supply concerns. Gold has found some dip demand around $2015 but capping at $2023 so far we we continue to range tightly.

GBPUSD: Support at 1.2575-80 after capping into 1.2630 yesterday. I remain poised for further sells when momentum fades as we continue to range. EURGBP: Basing yet again at 0.8535 yesterday but capping at 0.8560 as the BOE/ECB debates continues with large option interest between 0.8530-50 today very much helping to contain. GBPJPY: Holding 188.90-00 yesterday but capping into 189.40 as sellers remain poised on core pairs and fragile risk overall.

EURUSD: Holding 1.0750-60 but capping at 1.0790 as we range tightly. I remain a rally seller. USDJPY: 149.90 holding in yesterday's retreat but capping around 150.40 again so far with option interest lurking at 150.50.  and I remain a rally seller as preferred side overall given that the BOJ still don't want this racing away too far but dip demand still notable for the moment as I've been warning.

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

Interbank rates: 07.23 GMT

GBPUSD    1.2591

EURUSD    1.0771

EURGBP    0.8554

GBPEUR    1.1688

USDJPY    150.35

GBPJPY    189.32

GBPCAD    1.6983

GBPCHF    1.1117

GBPZAR    23.9640

GBPHKD    9.7992

USDCHF    0.8830

EURCHF    0.9511

EURHKD    8.3831

AUDUSD    0.6536

NZDUSD    0.6140

USDCAD    1.3502

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