USD demand once again

Friday 15 March 2024

Forex pairs still ranging amid ongoing conjecture on BOJ and US Fed interest rate/policy decisions next week but yesterday's US PPI data came in above expectations and saw the algos ramp the Greenback higher despite lower Retail Sales figures as inflation fears continue to dominate.

With FOMC in blackout we'll hear nothing from Fed heads until Wednesday but still seeing some chatter around BOJ tightening with Fin Min Suzuki declaring an end to deflation albeit with little positive impact on JPY as traders run a little cautious after all the recent talk and bets on any tightening next week moving toward April.

Data today includes US NY Empire State Manufcaturing Index and Capacity Utilisation but shouldn't change the outlook. The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions still cast their own shadow.

Equities remain underpinned overall on the firm belief that interest rates will be coming down at some stage soon apart from in Japan ofc but steady this morning after a retreat yesterday amid some profit-taking after the recent record highs being posted globally. WTI has pushed higher again testing $81.20 after holding $79.50 then $80.00 this time and now back down there amid the second-guessing on Red Sea/Gaza and global economy. Gold held $2150 again but capping at $2170 this time albeit remains underpinned overall on the belief that FOMC will start cutting rates in June.

GBPUSD: Failure around 1.2815-20 again then 1.2800 yesterday amid the USD demand but holding 1.2730 so far after breaking down through 1.2750 as the tight ranges continue. I remain poised for further re-sells when momentum fades. EURGBP: Holding 0.8525-30 but still capping at 0.8550 resistance as the BOE/ECB debates continue. GBPJPY: Holding 188.60 again in the latest retreat and some expected dip support once again helping with rally to 189.50-60 again this morning as JPY conjecture continues with BOJ next week in focus.

EURUSD: Support around 1.0875 this time in the extended retreat through 1.0920-30 then 1.0900 amid the USD demand and ECB rate cut chatter and sellers now capping at 1.0900. I remain a rally seller as my preferred side. USDJPY: Capping at 148.80 after a hold of 148.00 once we cleared that hurdle yesterday amid USD demand and markets tiring of lack of moves on BOJ tightening chatter. I remain a rally seller as preferred side overall but still expecting dip demand amid BOJ conjecture/disappointment.

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