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EUR / USD
GBP / USD
USD / JPY
USD / CAD
AUD / USD
NZD / USD
USD / CHF
AUD / JPY
AUD / NZD
EUR / CHF
EUR / GBP
EUR / JPY
GBP / JPY
By Rob Howard  —  Feb 27 - 05:30 AM
  • 0.6550 option expiry exerts magnetism over AUD/USD following drop to 0.6525

  • The 0.6550 strike rolls off at 10am ET. 0.6525 was one-week low in Asia

  • Iron ore rebound supports AUD (iron ore is big export earner for Australia)

  • China wine dispute may be resolved within weeks, Aussie trade minister says

  • Australia Jan inflation data due 0030 GMT; weighed CPI forecast at 3.6% YY

  • AUD/NZD might jump through 1.07 if RBNZ keeps OCR unchanged at 0100 GMT

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Feb 27 - 04:30 AM
  • Yen has firmed after consumer inflation data topped estimates nL2N3FC0EP

  • Markets expect BOJ to end negative rates in March or April nL3N3FB4P5

  • USD/JPY has dropped from 150.69 to 150.12, on Tuesday, EBS data shows

  • However USD/JPY still has scope bounce back to 2023/2022 peaks nL2N3FC0IX

  • A daily close under daily tenkan line, now at 150.17, would be negative

  • N.B. USD/JPY and EUR/JPY pairs currently have a strong positive correlation

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Feb 27 - 02:55 AM
  • USD/JPY has scope for bigger gains to test 2023/2022 151.92/94 peaks

  • That after remaining above broken 149.17 Fibo for thirteen days in a row

  • 149.17 Fibo is a 76.4% retrace of the (Nov-Dec) 151.92-140.27 (EBS) drop

  • Fourteen-day momentum remains positive, reinforcing the overall bull market

  • As does the positive alignment of the daily tenkan and kijun lines

  • EUR/JPY has seen a 163.25-163.39 range, on Tuesday, EBS data shows

  • USD/JPY Trader TGM2336. Bid at 150.05. Previous update nL2N3FB0EZ

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Feb 27 - 02:50 AM
  • Cable has traded a 20.5 pip range thus far Tuesday; 1.2695 = intra-day high

  • Tuesday range-to-date tighter than Monday, which was tighter than Friday

  • Friday range was tighter than Thursday. Sterling volatility hits 4-year low

  • 1.2700-10 is GBP/USD resistance window (1.2710 was three-week high Thursday)

  • UK should resist tax cuts without detailing spending pain, IFS says

  • BRC says UK shop price inflation falls to 2.5%, lowest since March 2022

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Feb 27 - 02:15 AM
  • EUR/USD daily "cloud twist", circa 1.0930 on Friday, could attract spot

  • Cloud twist is when the cloud extremes, senkou spans A and B, cross

  • Recently spot failed under the 1.0712 Fibo, setting up a "bear trap"

  • 1.0712 Fibo is a 61.8% retrace of the 1.0448-1.1139 (Oct to Dec) EBS rise

  • Bear trap: when spot breaks below a tech level but reverses and is bullish

  • However a big upper shadow on last Thursday's candle = an upside rejection

  • EUR/USD Trader TGM2334. Previous update nL2N3FB0DZ

  • Could dollar longs be set for some pain? nL2N3FA0ER

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Feb 27 - 01:30 AM
  • Bull pressure is building but the daily cloud top is resisting

  • We remain short from 1.2704 but the trade is in trouble

  • Pullbacks from the cloud have been limited

  • Daily momentum is positive but RSI has turned lower

  • A Mar. 11 1.2649-63 cloud twist is fighting our corner

  • However, a close above the cloud would open up the Feb. 2 high at 1.2772

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Feb 26 - 10:15 PM
  • EUR/USD opened +0.27% at 1.0850 and traded in a 1.0846/52 range

  • Interest limited as market looks ahead to US & EZ inflation data Thurs/Fri

  • EUR/USD forming trend higher as 5, 10 & 21-day MAs in a bullish alignment nL2N3FC03K

  • Resistance is at 1.0885/90 where the 55-day MA and Feb 22 high reside

  • Support is at the 10-day MA at 1.0803 and break would ease upward pressure

  • Bias is for buying dips while 1.0800 holds

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Feb 26 - 10:00 PM
  • AUD/USD opened -0.35% at 0.6540 after risk currencies underperformed

  • It continued to decline in Asia as risk assets came under some pressure nL3N3FB56F

  • Dalian iron ore fell close to 1.0% while the AXJ index fell 0.55%

  • AUD/USD traded down to 0.6525 and was near session low into the afternoon

  • It is now below the 10-day MA at 0.6538 and 21-day MA at 0.6531

  • A close below 0.6530 would increase downward pressure

  • Bids are tipped around 0.6500 with 61.8 of recent decline at 0.6501

  • Action likely to pick up Wednesday when RBNZ decides and monthly Aus CPI due

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Feb 26 - 06:55 PM
  • EUR/USD opens +0.27% after rise in EZ yields underpinned nL2N3FB1N6

  • Trend higher forming as 5, 10 & 21-day MAs in a bullish alignment

  • Resistance is at 1.0885/90 where the 55-day MA and Feb 22 high converge

  • A break above 1.0900 would suggest a bottom is in place at 1.0695

  • Support is at the 10-day MA at 1.0803 and break ease upward momentum

  • EUR/USD may pause ahead of Key US and EZ data out Thursday and Friday

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Feb 26 - 06:40 PM
  • Steady into the CPI - headline Core CPI y/y +2.0% against 1.8% expected

  • Overall +3.5% against 3.7% expected, Ex food and Energy +3.5% v's 3.7%

  • Muted initial response from USD/JPY which trades down 0.1% at 150.56

  • 151.92 2022 and 2023 high remains a potential BOJ intervention level

  • USD/JPY has been on hold in a 149.51/150.88 range for the last two weeks

  • 5, 10 & 21-day moving averages trend higher - positive signals

  • The 150.17 Tenkan line is initial support, then the 148.39 Kijun line

  • New York's 150.54-150.83 range is initial support and resistance

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Feb 26 - 06:05 PM
  • AUD/USD opens -0.35% after risk currencies fell against USD and EUR

  • Sluggish equity market, higher US yields and weaker iron ore weighed on AUD nL2N3FB2SFnL2N3FB246nL3N3FB0LU

  • Volumes were light ahead of Aus CPI and RBNZ decision Wednesday

  • AUD/USD managed to hold above support at the 10-day MA (0.6530 Monday)

  • It rises to 0.6539 today and close below would be bearish

  • Resistance is at last week's 0.6595 high where selling is tipped

  • Key in Asia will be moves in equities and Dalian iron ore

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 26 - 04:30 PM

Synopsis:

Danske Bank emphasizes a cautious approach towards EUR/USD, suggesting selling on rallies in anticipation of key data releases and central bank commentary this week. The focus will be on the US PCE price index and the ISM Manufacturing PMI, alongside European inflation figures. Expectations of core PCE inflation doubling in January may influence the Fed's stance, while softer inflation in the euro area could heighten expectations for an ECB rate cut in April.

Key Insights:

  • The week's key economic data include the US PCE price index and ISM Manufacturing PMI, along with European inflation figures.
  • Core PCE inflation in the US is expected to rise, potentially reinforcing a cautious Fed approach.
  • Softer European inflation could lead to increased speculation about an early ECB rate cut, pressuring EUR/USD.

Conclusion:

Amidst the backdrop of diverging monetary policy expectations between the ECB and the Fed, Danske Bank advises a strategy of selling EUR/USD on rallies. The bank anticipates that the currency pair's near-term direction will be influenced by inflation data and central bank rhetoric. A stronger USD is favored due to the ongoing monetary policy divergence, underscoring the cautious stance towards EUR/USD in the current market environment.

Source:
Danske Research/Market Commentary
By Randolph Donney  —  Feb 26 - 02:45 PM
  • USD/JPY uptrend is back up by 2024's 150.88 high on EBS

  • Mon's 150.30 low is above the prior dn TL off the 150.88 Feb. 13 high

  • And above the rising daily tenkan line at 150.17

  • 2024's up TL meets the cleared dn TL on Wed at 150.05-11

  • Rising lower 10-d Bolli is also supports 2024's up TL

  • A close above 150.88 would put in play 2023/22's 151.92/94 peaks

  • That would complete the retracement of the Nov-Dec 151.92-140.27 drop

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Randolph Donney  —  Feb 26 - 01:35 PM

The dollar index fell 0.1%, led lower by gains in EUR/USD, its primary component, ahead of key U.S. and euro zone inflation data late this week that could indicate whether the tightening of bund-Treasury yields spreads since mid-month will persist.

The dollar rose against the low-yielding yen and risk proxies such as the Australian dollar and yuan as the markets guess whether the delaying and nearly halving of expected 2024 Fed rate cuts since earlier this year, and particularly after January's febrile jobs report and above-forecast inflation updates, reached an apex last week.

Thursday's core PCE reading, along with February ISMs and the March 8 employment report, are eagerly awaited to settle the Fed policy debate.
As it stands, forecasts for the U.S. data, if met, ought not cause faster pricing in of Fed cuts and a weaker dollar.

But the longer rates remain elevated and equity markets remain driven to new peaks on the back of a select few stocks, the greater the fear that U.S. economic data will begin disappointing instead of beating expectations.

Currently, futures put the probability of a first Fed cut in June at only 60%, with less than 80bp of cuts by year's end, essentially matching the December Fed's 75bp dot plots.

Euro zone governments' CPI data is also due on Thursday, and the euro zone readings on Friday, with overall and core year-on-year forecast at 2.5% and 2.9% versus 2.8% and 3.3% in December.

The ECB's first rate cut is fully priced in for its June 6 meeting, six day's before the Fed meeting, with 88bp of cuts by year-end.

European Central Bank President Christine Lagarde reiterated on Monday that wage growth remains robust, though firms may be absorbing some of the increase via lower profits.
ECB speakers of late, along with those from the Fed, have pushed back on rapid rate cut pricing, but the ECB may also not want to beat the Fed in a June race to cut rates.

Japan's core CPI on Tuesday is forecast at 1.8% from 2.3% in December, adding to recessionary data that suggest an expected 10bp BoJ hike by April or June is less needed and USD/JPY's rise, Monday up 0.16%, toward 2023/22's 32-year peaks at 151.92/94 is to persist unless U.S. data weaken.

Sterling shed earlier gains, again finding sellers by the 61.8% Fibo of the December-February pullback and cloud top above 1.27.
Only 61bp of 2024 BoE cuts are priced in.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 26 - 01:30 PM

Synopsis:

HSBC suggests that GBP/USD is likely to stay range-bound in the near term, attributing this forecast to a decoupling from its historical correlation with risk appetite observed since early 2022. This shift is interpreted more as a reflection of changing market perceptions towards the USD rather than a fundamental change in the GBP's dynamics. The bank notes that while GBP/USD benefitted from this relationship, especially in Q4 2023, its current detachment suggests that GBP/USD might not leverage equity market gains stemming from US economic resilience. Conversely, it may also be less impacted by potential declines in global risk appetite, indicating a stable trading range ahead.

Key Points:

  • GBP/USD's correlation with risk appetite has weakened in 2024, diverging from trends seen since 2022.
  • This decoupling is seen as a reflection of the market's reassessment of the USD rather than the GBP.
  • The change suggests GBP/USD may not benefit from positive risk sentiment as before but also may be insulated from negative risk corrections.

Conclusion:

HSBC views the recent divergence between GBP/USD and risk appetite as indicative of a period of stability for the currency pair, with limited exposure to fluctuations in global equity markets. This assessment leads to the expectation that GBP/USD will maintain its current trading range, with the pair's movements less influenced by shifts in risk sentiment and more by specific GBP or USD drivers.

Source:
HSBC Research/Market Commentary
By Justin Mcqueen  —  Feb 26 - 12:25 PM

The Euro has been the notable beneficiary of a slightly weaker dollar to begin the week, allowing it to near its February highs from 1.0886-1.0897, but there are also obstacles ahead.

It is worth noting that Tuesday is corporate month-end, which is typically dollar supportive.
As such, this latest appreciation in EUR/USD may be short-lived and thus put the focus back on near-term support at 1.0815-25, which marks the 100 and 200-daily MAs.

In her latest remarks, European Central Bank President, Christine Lagarde, offered little in the way of new insights into the governing council’s thinking about the rate outlook.
The message remains the same with policymakers maintaining optionality.

Markets have continued to reprice lower the risk of an April rate cut, with the probability now at 35%, down from near-fully priced at the beginning of the month.
A dovish surprise in the upcoming inflation readings would keep that risk on the table and by extension renew downside pressure on the Euro.

Recall that headline inflation is currently 0.1ppt below the ECB’s 2.9% Q1 projection, meanwhile, core inflation is 0.2ppts above the bank’s 3.1% projection.

While hawks such as Robert Holzmann say the ECB are unlikely to cut before the Fed, incoming data may well suggest otherwise.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 26 - 10:45 AM

Synopsis:

MUFG highlights the significant performance of the NZD as the top high-yielding G10 currency in February, propelled by favorable FX carry trade conditions and a hawkish shift in the RBNZ's policy outlook. Increased market confidence this month suggests further rate hikes within the current tightening cycle, despite the policy rate already being the highest among G10 central banks at 5.50%. Although an immediate rate hike isn't anticipated at the upcoming RBNZ meeting, the market forecasts a likely hike in the first half of the year, with expectations set for a more explicit signal from the RBNZ regarding future rate adjustments.

Key Points:

  • NZD's strong performance in February is due to favorable carry trade conditions and hawkish RBNZ outlook.
  • Market expectations lean towards further rate hikes, with a potential signal from the upcoming RBNZ meeting.
  • RBNZ's previous stance indicated a possibility of further rate increases if inflation pressures intensify.

Conclusion:

The upcoming RBNZ meeting is crucial for setting the tone for NZD's near-term trajectory. Should the RBNZ align with market expectations for additional rate hikes, it could sustain NZD's high-yield appeal. Conversely, failing to endorse a hawkish outlook might pose risks to NZD's recent gains. G10 FX carry trades are anticipated to continue thriving in the near term, contingent on the RBNZ's forthcoming policy signals.

Source:
MUFG Research/Market Commentary
By Paul Spirgel  —  Feb 26 - 10:15 AM

Traders appear to have lost interest in testing the lower end of GBP/USD's 1.2788-1.2518 range, and recent inverted hammer formations suggest they may now try to push it in the other direction.

GBP/USD firmed near recent 3-week highs by 1.27 in early NorAm trade, supported by the inverted hammers on the charts for the last three days.

Rate fundamentals also bolstered support for the pound.

The dollar's ability to strengthen on declining Fed rate cut expectations has diminished now that the projections of the futures market have become more closely aligned to FOMC poliymakers' December dot plot.

Less dour UK economic data has also helped the pound by tamping down dovish sentiment that followed the most recent BoE meeting, a view supported by comments from MPC members indicating that the fight against inflation continues.

Markets are now awaiting U.S. and UK employment, wages and price data to refine interest rate expectations.
Fed and BoE rate announcements on March 20 and 21 are expected to yield no change in rates, but investors will scrutinize statements for near-term policy clues.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 26 - 09:30 AM

Synopsis:

Credit Agricole observes a notable rebound in EUR/USD, outpacing its movements against other major currencies like the USD, GBP, and JPY, despite relatively unchanged fundamental drivers. The current levels have propelled EUR/USD beyond its short-term fair value, estimated at around 1.08, suggesting a slight overvaluation at present. Historically, EUR/USD's trajectory has been closely aligned with the nominal and real EUR-USD rate spread and the peripheral yield spread to Bunds, both of which remain near recent lows. For sustained appreciation of EUR/USD, a significant change in these key drivers would be necessary. However, given the recent price adjustments, Credit Agricole holds a neutral stance on EUR/USD from its current position, highlighting that some positive aspects are already reflected in its price.

Key Insights:

  • Rebound and Overvaluation: EUR/USD's recent uptick has positioned it above its short-term fair value, indicating a slight overvaluation in the current market context.

  • Fundamental Drivers: The currency pair's movements have traditionally been influenced by the EUR-USD rate spread and peripheral yield spreads to Bunds, which have not significantly shifted to justify the recent appreciation.

  • Outlook: With the existing price levels incorporating some optimistic scenarios, Credit Agricole suggests a neutral outlook for EUR/USD, emphasizing the need for changes in key economic indicators for further sustained movement.

Conclusion:

While EUR/USD has experienced a rebound, its current valuation slightly exceeds fundamental justifications according to Credit Agricole's analysis. The bank suggests a neutral perspective on the currency pair, pointing to the importance of shifts in critical economic spreads for any future significant appreciation. This stance reflects a cautious approach to EUR/USD, considering the already priced-in positive factors.

Source:
Crédit Agricole Research/Market Commentary
By eFXdata  —  Feb 26 - 08:19 AM

Synopsis:

Goldman Sachs anticipates the Reserve Bank of New Zealand (RBNZ) to maintain its current policy stance in the upcoming meeting, with no changes expected until a projected rate cut in August. Despite market speculation, currently over 30% for a rate hike next week, Goldman's analysis aligns with the notion of a hold based on recent unanimous decisions and economic indicators suggesting a rebalancing economy. Given the global shift towards disinflationary trends, the RBNZ may opt for a cautious approach. This scenario, coupled with market expectations of a 'higher for longer' rates environment and the potential for a dovish surprise from the RBNZ, positions the New Zealand Dollar (NZD) for potential near-term weakness, particularly against high beta currencies less sensitive to rate adjustments.

Key Insights:

  • RBNZ's Next Moves: Goldman Sachs forecasts the RBNZ will keep rates unchanged in the upcoming meeting, with a first rate cut anticipated in August.

  • Market Expectations vs. Reality: Despite market bets on a rate hike, consistent economic data and global disinflationary pressures suggest a hold strategy from the RBNZ.

  • NZD's Position: Given the divergence between market expectations and potential RBNZ dovishness, the NZD faces near-term vulnerability, especially against currencies less affected by rate changes.

Conclusion:

Goldman Sachs' analysis underscores a cautious stance by the RBNZ amid evolving economic conditions, suggesting a potential mismatch with market expectations that could influence NZD performance in the short term. The focus remains on global economic trends and their impact on local policy decisions, highlighting the intricate balance central banks navigate in adjusting monetary policy.

Source:
Goldman Sachs Research/Market Commentary
By Rob Howard  —  Feb 26 - 06:55 AM
  • Cable eyes 1.2700 resistance level after rising from 1.2659 (Asia low)

  • 1.2700 approximates to Friday's high (1.2710 was Thursday's three-week peak)

  • UK CBI February retail sales balance minus 7 vs minus 50 in Jan nS8N39B03O

  • CFTC data on FX positioning showed first fall in net GBP long since December

  • 'Chaotic' Congress faces whirlwind of shutdown, impeachment, border fights

  • Trump struggles to unify Republicans before matchup with Biden nL2N3FA0GY

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Feb 26 - 05:55 AM
  • There is scope for a 151 test where option barriers likely resides

  • Japanese importers among those who bought near session lows

  • USD/JPY has seen a 150.30-150.67 range, on Monday, EBS data shows

  • Sustained trading above a broken 149.17 Fibo should see it soar nL2N3FB0EZ

  • 149.17 Fibo is a 76.4% retrace of the (Nov-Dec) 151.92-140.27 (EBS) drop

  • USD/JPY and EUR/JPY pairs currently have a strong positive correlation

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Feb 26 - 05:35 AM
  • AUD/USD drop to 0.6542 influenced by iron ore slide to four-month low

  • 0.6542 is lowest level since Thursday (0.6541 was low that day)

  • Risk-sensitive AUD also hurt by negative day for China stocks nL2N3FB0D6

  • There is a large 0.6550 option expiry on Tuesday, A$406 million strike

  • CFTC data showed net AUD short rose to 81,875 contracts in week ended Feb 20

  • Sixth consecutive weekly rise. 81,875 is largest net AUD short since October

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Feb 26 - 03:25 AM
  • USD/JPY has scope for bigger gains to test 2023/2022 151.92/94 peaks

  • That after remaining above broken 149.17 Fibo for twelve days in a row

  • 149.17 Fibo is a 76.4% retrace of the (Nov-Dec) 151.92-140.27 (EBS) drop

  • Fourteen-day momentum remains positive, reinforcing the overall bull market

  • As does the positive alignment of the daily tenkan and kijun lines

  • EUR/JPY has seen a 162.58-162.97 range, on Monday, EBS data shows

  • USD/JPY Trader TGM2336. Bid at 150.05. Previous update nL2N3F739C

Source:
Refinitiv IFR Research/Market Commentary
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