Bank of America Global Research prefers downside EUR/USD exposure through this Summer,

"There is a case to be made for EUR/USD to potentially trade through our Q2 forecast of 1.14, which is also just below its 12-month lows. The growth divergence between the US and EA is notable and arguably being underpriced by rates markets," BofA notes

"But hope for a peace agreement in the Middle East has prevented larger themes from taking hold. Even as there has been some associated reprieve in energy markets, upside risks points to downside risks to the EUR (from a terms-of-trade perspective). This suggests a real possibility of further USD supportive Fed repricing, while ECB hikes could prove counter-productive for the EUR... We prefer to fade rebounds and continue to look for renewed downside.," BofA adds.

AUD/USD traded near flat on Wednesday despite a weaker U.S. dollar and falling Treasury yields following the May CPI report, suggesting the U.S. economic data alone wasn't enough to support the pair.

Investors holding short positions may soon be rewarded, as the pair hit a fresh two-month low of 0.6998, briefly piercing both the uptrend line from the December 18 daily low and the 61.8% Fibonacci retracement of the March 31 to May 6 rally. While the pair managed to bounce from those levels, downside risks remain firmly intact.

Commodity markets are adding to the bearish case. Gold has been trending lower since April 17, silver since May 13, and copper's broader uptrend has stalled — all of which have weighed on AUD/USD since its mid-May high. Gold and silver are now approaching their March 23 daily lows, and a break of those levels could intensify selling pressure on the pair.

From a technical standpoint, the signals remain decidedly bearish. AUD/USD is trading below the daily Ichimoku cloud and the 10-, 21-, and 55-day moving averages. Monthly RSI points to entrenched longer-term downward momentum, and June's price decline following May's monthly doji candle reinforces the negative outlook. Should the pair make a clean and sustained break below the 0.7000 support zone, the next key target would be the March monthly low.
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Credit Agricole CIB Research discusses the trajectory of ECB hikes this year.

"We could explain that we believe that the ECB will hike three times while arguing that the ECB is making a huge mistake (this is also a good hedge against being wrong, as it means that either we were right or that the ECB took our advice and decided to avoid making a mistake). But this is not our case today. " CACIB notes.

"Not only do we believe that this year the ECB will hike by more than what economists expect (and marginally more than what is priced by markets), but we also we believe that the ECB is right to do so. This is not a policy mistake. This is just monetary policy," CACIB adds.

• AUD/USD traded 0.7032-0.7005 overnight, NY opened near 0.7010, down -0.21%

• Broad-basded US buying, US yield gains helped weigh down the pair

• Drops in gold , silver , copper , stocks

added weight

• The pair holds just above the two-month low that was struck Tuesday

• Techs lean bearish; daily & monthly RSIs indicate downward momentum is in place

• AUD/USD's hold below the daily cloud, 10-, 21- & 55-DMAs reinforces bearish signals

• Investors will be focused on the US May CPI report which could impact risk sentiment
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• EUR/GBP has traded an eight pip range thus far Wednesday; 0.8625-0.8633

• 0.8620 was two-week low Tuesday (0.8620 equates to GBP/EUR 1.16)

• Tuesday low was pip shy of May 25-26 lows (0.8612 was March low)

• ECB is expected to hike its policy rate by 25 bps to 2.25% on Thursday

• Why an ECB hike could be a policy mistake. BoE rate hold expected next week

• Next week's key UK event risk is the Makerfield by-election (result June 19)

EURGBP


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• EUR/CHF hits 0.9229 EBS high after adding to recent gains

• 0.9229 is the highest level since April 30 (0.9240 was EBS high that day)

• ECB vs SNB rate expectations are a source of support for EUR/CHF

• ECB hike to 2.25% expected Thursday; SNB set to keep its policy rate at zero next week

• Sunday's Swiss population cap referendum is negative event risk for franc

• Germany risks recession as Iran energy shock hits growth, DIW economists say

EURCHF


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• USD/JPY looks set to test Japan's resolve

• Yen remains weak despite expected BOJ rate hike

• USD/JPY has seen a modest 160.24-160.43 range on Wednesday, EBS data shows

• There is scope for a 2026 160.72 high retest, April 30 peak when Japan intervened in yen

• 30-day log correlation between USD/JPY, EUR/JPY is above +0.5 (pairs are moving in tandem)

Correlation Chart


Daily Chart


(Martin Miller is a Reuters market analyst. The views expressed are his own)

• AUD/USD has traded a 23 pip range thus far Wednesday; 0.7009-0.7032

• 0.7009 is four pips above Tuesday's two-month low

• U.S. May CPI data due at 1230 GMT; 4.2% YY expected vs 3.8% in April

• Hotter print could spur hawkish shift in Fed expectations, and boost USD

• 0.6979 (April 13 low) is an AUD/USD support point below 0.7000

• Iran targets US bases in Jordan and the Gulf after Trump orders strikes near Hormuz

AUDUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• Cable has traded a 26.5 pip range thus far Wednesday; 1.33695-1.3396

• Those parameters are within Tuesday's 1.33595-1.3411 NY session range

• 1.3411 is the high water-mark since Monday's three-week low of 1.33065

• U.S. May CPI data due at 1230 GMT; 4.2% YY expected vs 3.8% in April

• Hotter print would get hawks squawking for Fed hike, and could inflate USD

• Iran targets US bases in Jordan and the Gulf after Trump orders strikes near Hormuz

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• FX options expire at 10am New York / 15:00 GMT on Wednesday June 10

• EUR/USD: 1.1500 (621M), 1.1540-50 (2BLN), 1.1560-65 (1.2BLN), 1.1575 (660M)

• 1.1595-1.1610 (1.6BLN)

• USD/CHF: 0.7885 (276M), 0.7950 (470M). EUR/CHF: 0.9200 (575M), 0.9215 (300M), 0.9260 (300M)

• GBP/USD: 1.3350 (531M), 1.3425-35 (510M)

• AUD/USD: 0.6980 (200M), 0.7000 (546M), 0.7030 (270M), 0.7050 (380M)

• NZD/USD: 0.5775 (460M), 0.5800 (475M). AUD/NZD: 1.2100 (615M)

• USD/CAD: 1.3945-55 (861M)

• USD/JPY: 160.00 (1.8BLN), 160.25-35 (869M), 160.50 (1.2BLN)

• FX options wrap - Complacency fades as FX risks mount (Richard Pace is a Reuters market analyst. The views expressed are his own)

• USD/JPY bid in Asia, 160.24-43 EBS, on re-flaring of Middle East tensions

• Recently tad wider JGB-US Treasury rate differentials helping

• Gotobi Tokyo fix and Japanese importer demand strong

• Market jittery though on intervention threat, quick dip before bounce

• Tech support from area of 160.25 hourly Ichimoku kijun, cloud 160.06-17

• Ascending 100 and 200-HMAs at 160.13 and 159.89, respectively

• Large option expiries in area to help contain spot action again

• 160.00 $1.8 bln, 160.25-45 $1.1 bln, 160.50 $1.2 bln, 160.70-161.05 $720 mln

• GBP/JPY holding own 214.18-63, in 212.85-215.61 range since last Friday

• Above 213.54-214.23 hourly and 212.49-213.33 daily Ichimoku clouds

• EUR/JPY on heavy side too, 185.02-07 EBS, in 187.75-185.10 hourly cloud

• 100/200-HMAs at 185.35/42 to cap? 184.00 spike low Monday base for now?

• Smattering of option expiries today from 184.25 to 185.60

• CHF/JPY 200.41-97, below 201.02-03/200.79-201.69 daily/hourly Ichi clouds

• Out of market's range but massive CHF1.1 bln option expiries today at 198.50

• AUD/JPY heavy between 112.45-77, holding above 111.52-72 daily Ichi cloud

• However, holding below hourly Ichimoku cloud between 112.87-113.31

• NZD/JPY also holding above 92.47-63 daily cloud, between 92.97-93.38 in Asia

• Near top of 93.02-32 hourly Ichi cloud, below descending 100-HMA at 93.38

• Japan May wholesale prices up large, to make BOJ even more hawkish?

• Related comments , , also

• On Japan CGPI , for more click on [FXBUZ]

USD/JPY hourly:


GBP/JPY hourly:


AUD/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• AUD/USD flat Wed as traders ponder Iran deterioration & CN inflation update

• CN May PPI +3.9% y/y (poll 3.8%), CPI +1.2% y/y (poll 1.3%) & -0.1% m/m

• U.S.-Iran hostilities re-escalate as Iran hits back after fresh U.S. strikes

• Brent crude +0.9% & DXY steady Wed in benign response thus far

• U.S. CPI due Wed (Reuters poll consensus +4.2% y/y), U.S. May PPI due Thur

• AUD targeting 0.6834 support zone as DXY continues to probe topside

• Range Asia 0.7016-32, support 0.6834, resistance 0.7080 0.7200 0.7283
AUD Weekly 52-WMA


AUD Hourly Bollinger Study & DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• Australian gold stocks fall 2.1% to 15,006.2 points

• Gold sub-index slides for a fifth consecutive session

• Gold down over 1% to a more than two-month low on Tuesday, tracking broader market selloff and pressured by rising expectations of a U.S. interest rate hike this year [GOL/]

• Shares of heavyweights Northern Star Resources and Evolution Mining down 1.6% each

• YTD, AXGD down 20.3% vs a 0.9% drop in the broader benchmark

(Reporting by Jasmeen Ara Shaikh in Bengaluru)

• Fresh developments in the Middle East upped geopolitical tensions overnight

• USD bid across board on reports of fresh attacks by both Iran and US

• USD/JPY 160.06 to 160.45 EBS yesterday, Asia so far 160.35-41

• No Japan FX intervention again, difficult for MOF to attack when USD strong

• Market also lacking in volatility with recent moves gradual, sedate

• That said, JPY shorts up large recently, MOF wants to punish speculators

• Talk on rise too BOJ may have to hike more than expected 25 bps next week

• Support from 160.33 hourly Ichimoku tenkan, kijun 160.25, cloud 160.06-14

• Option expiries today 160.00 $1.8 bln, 160.25-45 $1.1 bln, 160.50 $1.2 bln

• Above between 160.70-161.05 total $720 mln, also 161.50 $701 mln

• JGB-US Treasury rate differentials on wide side, 2s @272, 10s 187 bps

• Related comments , , ,

• And , also , on US-Iran

• US markets , , ,

• On the BOJ , for more click on [FXBUZ]

USD/JPY:


USD/JPY nearby option expiries this week:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• NZD/USD -0.1% Wed after U.S. launches fresh attacks against Iran

• Trump fulfils retaliation threat in wake of downed Apache helicopter

• Iran torments U.S., progress on Middle East peace deal looks unlikely

• NZD targeting break below 0.5680 support, downswing will accelerate below

• CN May inflation data & U.S. CPI due Wed, U.S. May PPI due Thur

• Range NZ 0.58075-22, support 0.5680 5580, resistance 0.5990-95 0.6012
NZD Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• AUD/USD -0.7% from Tue 0.7071 high as U.S.-Iran deterioration weighs

• U.S. launces fresh strikes on Iran in response to downed Apache helicopter

• Trump had earlier foreshadowed retaliation, puts peace deal in doubt

• CN May inflation data & U.S. CPI due Wed, U.S. May PPI due Thur

• 0.7080 resistance tough to break from here, expect further downside pressure

• Overnight range 0.7005-625, support 0.6834, resistance 0.7080 0.7200 0.7283
AUD Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

Credit Agricole CIB Research previews the June BoC meeting on Wednesday.

"The BoC is unlikely to make any major changes when it meets on Wednesday. The policy rate is expected to stay at 2.25% and the bank looks poised to just stick to its noncommittal stance, especially as the next Monetary Policy Report will not be published until July. There should not be any specific pushback to tightening prospects which have actually been tamed significantly since the April meeting, with just about one rate hike priced-in now by the end of the year," CACIB notes.

"Ultimately, in contrast to earlier in the year, the sizeable widening in USD-CAD rate differentials since the start of May could explain most of the rally in USD/CAD over that period. Yet, our Fed-BoC policy outlooks do not necessarily foresee more divergence from here, which could help USD/CAD to stabilise in the upper end of its 1.35/1.40 range going into the summer. That would be in line with our long-held forecast of 1.39 for mid-year, although admittedly we had initially flagged potential threats around the USMCA review as the main reason to keep the pair there, whereas so far the process has not proved overly confrontational," CACIB adds.

The dollar traded mixed against its major peers on Tuesday as a slide in U.S. tech stocks ahead of Wednesday’s CPI report and SpaceX’s market debut on Friday pressured both commodity prices and risk-sensitive currencies.

Annualized CPI is forecast to have accelerated to 4.2% in May, posing a potential challenge for a new Fed chair viewed as dovish. The risk-off bias also preceded an expected rate hike by the European Central Bank on Thursday. Oil also declined after U.S. Energy Secretary Chris Wright said Gulf shipping and Strait of Hormuz exports are rising despite stalled U.S.-Iran talks. This comes even as stockpiles in major economies near their lowest levels since at least 2003, with Middle East tensions simmering. President Donald Trump said Iran had shot down a U.S. Apache helicopter patrolling the Strait of Hormuz overnight and vowed a response. U.N. Secretary-General Antonio Guterres said he was “deeply alarmed” by the renewed escalation in the Middle East. Britain, Canada, France and Norway imposed coordinated sanctions on Israeli West Bank violence networks. China-related pressures include potential tighter Taiwan curbs on AI chip exports, new outbound investment rules hitting foreign banks, and U.S. claims that Chinese tech firms are aiding the military.

The dollar index remains under pressure after a failed break above 100 last week, though risk reversals suggest upside potential if volatility rises. USD/JPY is holding firm above 160 with a mild upside bias toward the 160.72 peak, though overbought signals and intervention risks suggest gains may be limited and choppy. AUD/USD slipped amid sliding metal prices and risk-off flows, keeping a bearish bias as technicals point to downside momentum. EUR/USD rebounded from its lower Bollinger near 1.1530 as U.S. shares trimmed losses, but a bearish longer-term head-and-shoulders pattern keep downside risks in focus despite near-term RSI support. GBP/USD held a modest upside bias near 1.3390, supported by cross flows and softer oil, but gains remain capped by Middle East tensions and a firmer U.S. policy outlook ahead of CPI.

Treasury yields were down 1 to 3 basis points as the curve steepened. The 2s-10s curve was marginally higher at +40.1bp.

The S&P 500 slid 0.59% as sinking tech shares weighed.

WTI oil fell 3.3%.

Gold dropped 1.5% and silver tumbled 4.0% though copper was little changed.

Heading toward the close: EUR/USD +0.13%, USD/JPY +0.11%, GBP/USD +0.39%, AUD/USD -0.21%, DXY -0.13%, EUR/JPY +0.23%, GBP/JPY +0.47%, AUD/JPY -0.12%.(Editing by Burton Frierson Reporting by Robert Fullem)

• NY opened near 0.7055 after AUD/UD rallied slightly overnight, rally extended early NY

• USD, US yield , oil drops helped the pair rally to 0.7062

• Selling then took hold as gold, silver & equities turned lower & USD/CNH rallied to 6.7797

• Drop intensified after Pres. Trump said Iran downed a US helicopter & US must react

• USD firmed up while stocks, gold, silver fell sharply; AUD/USD traded down to 0.7005

• Commodities & equities erodes some losses & USD softened; AUD/USD neared 0.7030 late

• Techs lean bearish; RSIs indicate downward momentum, pair traded below the daily cloud
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Danske Research previews the US May CPI report on Wednesday.

"We forecast tomorrow’s May CPI at 4.3% y/y (Apr. 3.8%) in headline terms and 2.9% y/y (Apr. 2.8%) in core terms, slightly above consensus. The headline figure is still primarily lifted by higher gasoline prices. In monthly terms, core inflation will likely slow down (+0.3% m/m SA, Apr. +0.4% m/m SA) after the one-off technical distortion that boosted housing inflation in April," Danske notes.

"In case the CPI surprises on the top side, we would not be surprised to see markets temporarily pricing in even more hikes than we ultimately expect to materialise. Our trade recommendations for going long USD FX vis-à-vis SEK and NOK have performed well over the past week, and we continue to like both cases," Dasnke adds.

EUR/USD rallied Tuesday as the U.S. dollar, yields, and oil all declined, giving bears a squeeze. However, investors positioned for a sustained rally may be walking into a buy-the-rumor-sell-the-fact scenario heading into Thursday's ECB decision.

Markets have been pricing in roughly three 25bps ECB rate hikes over the next nine months, a view that took shape in late February and has remained largely stable since the end of April. While a 25bps hike at Thursday's meeting is widely expected, the real market mover could be ECB President Christine Lagarde's press conference. EUR/USD bulls will need a decisively hawkish tone from Lagarde to push rates markets to price in additional tightening beyond current expectations.

Some may doubt whether that hawkish signal will come. With euro zone economic growth still sluggish, Lagarde's language could fall short of bulls' hopes. Any disappointment on that front could send both rates and EUR/USD lower.

Technically, a pullback could bring the pair toward the neckline of a head-and-shoulders topping pattern on the monthly chart, sitting near 1.1425. A completion of that pattern would signal the potential for a significant and deeper decline.

Beyond the ECB, attention will quickly shift to next week's Federal Reserve meeting, where investors will be watching closely to gauge how new Fed Chair Kevin Warsh positions himself on monetary policy.
eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Bank of America Global Research previews the June BoC policy decision on Wednesday.

"We expect the BoC to leave its policy rate unchanged at 2.25% on June 10 and to remain on hold through year-end as it assesses incoming data and monitors developments on the Iran conflict and the USMCA review. We also expect the BoC to underscore ongoing economic weakness, reflected in two consecutive quarters of contraction (Chart of the day) and a soft labor market. A negative output gap further argues against hikes, as it is helping keep core inflation contained," BofA notes.

"At the same time, we expect the BoC to acknowledge the risk that inflation could remain persistently high, driven by elevated oil prices. Forward guidance should reflect these risks with a cautious tone, while continuing to emphasize flexibility and adaptability as the effects of higher oil prices become clearer and the USMCA review progresses. Rates rallied and curve steepened in recent weeks as market priced out near-term hikes," BofA adds.

By Justin McQueen

June 9 (Reuters) - Bitcoin is undergoing its deepest drawdown from a rolling 1-year high since 2022, now down over 50% from the $125,000 peak. Recent price action has turned more disorderly, with losses accelerating to around 15% month-to-date, which accounts for more than half of the year-to-date decline of 28%.

The latest leg lower was triggered by headlines that Strategy – formerly MicroStrategy – had reduced its Bitcoin holdings. While the sale itself was small – 32 BTC – the signalling effect was more material given the firm’s long-standing “never sell” stance. Subsequent disclosure of renewed buying has done little to stabilise sentiment, with the market instead focusing on the shift in narrative.

Looking at prior cycles, the current drawdown has already exceeded the long-run average of around 38% since 2014. A move in line with the more severe episodes in 2018 (-83%) and 2022 (-77%) would imply downside towards the $22,000–$28,000 range.

However, the macro picture remains key. Both 2018 and 2022 drawdowns coincided with an active tightening cycle from the Federal Reserve. While we are not currently in a hiking phase, the recent repricing in inflation expectations alongside a firmer labour market has reintroduced upside risks to the rate path. Should the Fed shift toward signalling that policy tightening is on the table, this would likely reinforce downside in Bitcoin and raise the probability of a deeper, cycle-like drawdown.

In the short-run, BTC is testing the 200-week moving average at 61,976, which is a level that has historically acted as key structural support and will be closely watched for signs of base formation.
BTC drawdown


btc vs 200week ma


(Justin McQueen is a Reuters market analyst. (The views expressed are his own) ((Email: ))

Morgan Stanley Research previews the US May CPI report on Wednesday.

"We see core CPI at 0.22% m/m (2.8% y/y), slowing from 0.38% m/m in April, driven by deceleration in core services alongside still-positive core goods inflation. The step-down in core is largely explained by easing shelter inflation," MS notes.

"Core goods inflation remains positive-tariff pass-through is not yet complete although its impact is gradually fading. Headline CPI is expected to rise 0.56% m/m and 4.3% y/y, outpacing core on the back of further increases in gasoline prices in May. Absent additional gains in oil prices, headline inflation should begin to trend lower in June. Our forecasts are consistent with core PCE prices rising 0.24% m/m and stalling at 3.3% y/y in May. Headline PCE prices would rise 0.43% m/m and 4.0% y/y," MS adds.