Friday 22 March 2024
After its initial wobble and sell-off post-FOMC we've now seen consolidated USD buying return given that the Powell rhetoric wasn't really that dovish and markets once again over reacted. Higher US bond yields and data helping too. Still ranging overall though but notable JPY demand returning which is also helping to cap USDJPY and GBP and the Pound even lower since the BOE decision yesterday with Bailey more than hinting afterwards that they're ready to cut rates sooner rather than later although markets still pricing in 75bps by year end and probably starting in August.
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 generally coming down at some stage soon and rising again this morning after another profit-taking retreat. WTI has now fallen back through $80.50 this time amid the USD demand after capping at $81.80 amid the second-guessing on Red Sea/Gaza, CBs and global economy. Gold holding $2160 this time again after the retreat from $2210 with some profit-taking also evident as we head into the week-end.
GBPUSD: Capping at 1.2750 yesterday post-BOE and a solid/welcome retreat into 1.2575 amid the dovish tones and USD demand double whammy. I remain poised for further re-sells when momentum fades. EURGBP: Breaking higher on the dovish BOE implications but sellers poised into 0.8600 with ECB cuts also on the agenda. GBPJPY: A solid retreat amid the GBP supply/JPY demand double whammy but holding 190.50 after capping at 193.00. Sellers will remain poised as I've been warning.
Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk
EURUSD: Support around 1.0800 now after capping at 1.0860-80 amid the USD demand. I remain a rally seller as my preferred side. USDJPY: Still capping around 151.80 which is helping to produce the JPY demand generally and further helping.I still prefer to play from short-side but also still expecting dip demand for the moment. Patience a virtue as ever here.
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