Thursday 25 July 2024
General USD demand still but JPY demand still prevailing with USDJPY once again in retreat bringing more stop losses and a general unwinding of short JPY positions that had proven so popular until recently. CHF demand notable too amid the softer risk tones. As I said yesterday little really has changed, MOF intervention apart, but the risk sentiment/equity appetite has and that's always key to trading patterns. It's taken a while but it seems we're now getting the long-overdue reality check amid thinner liquidity summer trading.
JPY and CHF demand on the cross flows helped by the softer risk tones is still also capping core pairs too elsewhere in addition to the USD demand. Some key levels still under threat. China has cut interest rates again in a bid to stimulate their flagging economy but that's only adding to the current market panic. BOJ meet next week. Yesterday's BOC rate decision brought the expected rate cut of 25bps and with it some dovish tones for another one before too long. Today's data slate has just brought softer German IFO but we await US weekly jobless claims, Q2 GDP, PCE and Durable Goods from 12.30 GMT.
US and European equity markets are still in retreat as the long-anticipated reversal continues with rally sellers/proft takers still poised as I've been warning. WTI failed at $78.00 this time but has held $76.50-60. Gold has ignored the softer risk tones with safe-haven preference for JPY and CHF for the moment and fallen to $2360-70 with rallies capped for the moment by more profit-taking.
GBPUSD: Capping above 1.2930 yesterday with GBPJPY selling in play once again along with some general USD demand still but continues to hold the 1.2875-80 support I highlighted yesterday. I prefer rally-sell side still overall. EURGBP: Holding 0.8390-95 but still struggling to rally too far with ECB/BOE rate cut conjecture in play and other cross flows. GBPJPY: USDJPY failure above 155.00 capping this pair at 201.00 this time and now down through decent support between 197-198 to test 196.00 as the JPY demand continues.
EURUSD: Still holding 1.0825 support so far as we continue to range tightly amid variable cross and USD flows. USDJPY: Capping at 155.00 then 154.00 and another rapid drop in Asia to look at 152.00. MOF/BOJ intervention can't be ruled out but JPY sentiment has now been turned on its head again.
Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk
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