New month, same story.

Tuesday 2 April 2024

The same scenario continues as another month gets under way and we've seen further US Dollar demand amid higher bond yields, strong US data and increasing bets against an FOMC June rate cut. USDJPY still prone to Japanese verbal intervention keeping a lid on things at the key 151.80-00 area again though.

Some final PMIs out this morning out this morning offering few clues but regional German CPI data mostly showing y/y decline but with rising m/m giving the ECB plenty to think about still.

The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions still cast their own shadow. 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. These are tight ranges and will produce regular jobbing opportunities therefore while the jury remains out.

Equities remain underpinned overall on the firm belief that interest rates will be coming down at some stage soon but have been in retreat this morning amid some more profit-taking. WTI has rallied strongly after finding a base at $82.30-50 helped by the decent US data and rising tensions in the Middle East  and breaking up through $84.00 to post $84.70 so far but the second-guessing on Red Sea/Gaza, CBs and global economy will continue. Gold breaking $2200 again and also rallying strongly to $2262 as the shiny stuff retains its allure

GBPUSD: Capping at 1.2600-10 yesterday amid the USD demand and some GBPJPY rally supply again and now down through the technical support around 1.2580 to test the next strong line at 1.2530-40. I remain poised for further re-sells when momentum fades. EURGBP: Sellers prevailing at 0.8565 this time but holding 0.8540 atm amid the ongoing ECB/BOE rate cut conjecture. GBPJPY: A retreat into 190.00 amid the GBP supply/JPY demand double whammy again after capping at 190.80 then 190.60 as USDJPY remains capped too.

EURUSD: Support around 1.0725 for the moment after capping at 1.0750-60 amid the USD demand. I remain a rally seller as my preferred side. USDJPY: Duly capping around 151.80 on the USD demand-led bounce from 151.30-50. I still prefer to play from short-side but also still expecting dip demand for the moment. Patience a virtue as ever here.

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