Yen demand prevailing still

Wednesday 24 July 2024

Some general USD demand still but JPY demand still prevailing with USDJPY once again in retreat after those recent dovish remarks from the BOJ on the Japanese economy and reports of some more subtle intervention bringing a general unwinding of short JPY positions that had proven so popular until recently. Little really has changed meanwhile, intervention apart, but the sentiment has and that's always key to trading patterns.

The JPY demand on the cross flows helped the softer risk tones is also capping core pairs too in addition to the USD demand. Some key levels now under threat including USDJPY, EURUSD and AUDUSD. Latest flash PMI data this morning not helping the Euro either. Some ECB speakers up to the rostrum today. BOC rate decision the focus for CAD pairs with an expected rate cut of 25bps at 14.00 GMT.

US and European equity markets have retreated once again with rally sellers/proft takers still poised for the moment as I've been warning. WTI failed at $78.50-60 and has made further losses to test $76.30-50 amid soter economic outlook. Gold has ground its way back above $2400 to test $2420 but rallies capped for the moment by more profit-taking. Dip demand should remain but profit-takers/sellers still poised.

GBPUSD:  Capping between 1.2920-30 yesterday with GBPJPY selling in play along with some general USD demand still and finally broke through the decent 1.2900 support. Testing 1.2875-80 bids as I type. EURGBP: Holding 0.8395 but still struggling to rally too far with ECB/BOE rate cut conjecture in play still plus the EUR supply returning generally that I noted yesterday. GBPJPY: USDJPY failure above 156.50 capping this pair at 202.00 this time and now down through 200.00 support to test 199.00 as the JPY demand continues.

EURUSD: Grinding its way lower amid the USD demand and helped by EURJPY supply but holding 1.0825 support so far as we continue to range tightly amid variable cross and USD flows. USDJPY: Capping at 156.50 this time and a test of key 154.50-60 this morning before a small bounce as I type.  MOF/BOJ intervention fears remain and 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