• GBP$ soft in NY afternoon trade, -0.4% at 1.3645; NorAm range 1.3729-1.3643

• USD higher amid Tech selloff, broad risk unwind; precious metals reverse early rise

• BoE rate decision Thursday, no change expected, vote and guidance in focus

• Rtrs consensus f/c for 7-2 vote; more cut votes, dovish Bailey guidance may sink pound

• On flip side a more hawkish vote amid pay growth may stall cut pushing GBP higher

• GBP$ res 1.3700 psychological lvl, 1.3733 Wednesday high, 1.3803 upper 30-d Bolli

• Supt 1.3624 daily low Feb 2, 1.3594 daily base line, 1.3540 rising 30-DMA

GBP Chart:


(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

UniCredit Research previews the February ECB policy meeting on Thursday. 

"The ECB will almost certainly leave interest rates unchanged this week. Information available since the December meeting broadly confirms the central bank’s baseline scenario. Economic activity and the labour market continue to show resilience to the highly uncertain geopolitical environment, as do financial markets," UniCredit notes.

"A stronger euro is unlikely to pose a major threat to the ECB’s baseline scenario. However, data dependency and a meeting-by-meeting approach provide the central bank with enough flexibility to act swiftly if medium-term price stability were jeopardized. We confirm our view that the deposit rate will remain at 2% until well into 2027," UniCredit adds.

• NY opened near 0.7030 after AUD/USD 0.7043 overnight, pair lifted early

• 0.7035 traded but bulls ran out of steam, the pair began falling

• US$ buying persisted in NY, USD/CNH rallied up to 6.9432

• Gold , silver erased gains, turned lower, reinforced US$ buying

• AUD/USD turned lower on the session, neared the 10-DMA, hit 0.6972

• Daily RSI turned downward & a daily inverted hammer candle formed
audusd


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

Nomura Research discusses JPY outlook around Japan's Feb-8 snap elections.

"USD/JPY traded narrowly in the mid-155s during Asian hours as the snap election approaches. Media reports strongly favor the LDP achieving a lower house majority; if the risk scenario of the coalition winning over two‐thirds of seats materializes it would boost PM Takaichi’s policy-making power, likely prompting pro‐Takaichi trading initially," Nomura notes.

"However, the reduced pressure to adopt looser fiscal/monetary policies to gain support from opposition parties would gradually stabilize JGBs and prompt JPY buying," Nomura adds.

EUR/USD could face downward pressure in the coming sessions due to interest rate differentials and bearish technicals.

Below-forecast January euro zone core inflation, which came in at 2.2% versus expectations of 2.3%, heightened the dollar's yield advantage over the euro.

Consequently, German yields have declined as investors may be leaning toward a more dovish stance from the ECB in upcoming meetings.

This dynamic has resulted in a widening of U.S.-German 2-year yield spreads, nearing a critical trend line support level established from the highs in May and the wide observed on Jan. 20. A further widening of these spreads could put additional bearish pressure on EUR/USD.

Technical indicators also suggest a negative outlook for the pair.

EUR/USD is currently consolidating the drop from the Jan. 27 high while trading below the 50% Fibonacci retracement of the rally from 1.1572 to 1.2084, as well as beneath the 10-day moving average.

Both monthly and daily RSIs are falling and indicate that downward momentum remains intact, with the monthly RSI failing to confirm the January high.

The formation of a daily gravestone doji candle adds to the bearish sentiment, as does the price drop in February following January's monthly doji.

If influences from spreads and technicals persist, a test of the 1.1500-1.1575 area may be due.
deus


eurusd


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

BNP Paribas Research maintains a bullish bias on Gold and initiated a long position via options.

"We think the downwards correction has gone too far, exacerbated by profit-taking. We remain bullish on gold prices from here as we believe many of the underlying drivers are unchanged, while high equity valuations and retail investment demand bring additional support," BNPP notes.

"W"e therefore take the opportunity to position for gold upside on this recent pullback in prices.  Long Dec 26 USD6000-6500 oz gold call spread at USD71/oz," BNPP adds.

Bank of America Global Research previews February BoE meeting and GBP outlook around the meeting.

"We expect the BoE to keep the Bank Rate on hold at 3.75% this week. BoE's gradual guidance, pickup in inflation, better sentiment and elevated price/wage expectations rule out a back-to-back cut. We expect a 7-2 vote for a hold, with risks of 6-3," BofA notes.

"The February BoE meeting holds some risks for the pound which will take its lead from gilt price action. We think the risks are skewed asymmetrically: a more dovish MPC risks some profit-taking on long GBP positions Whilst the MPC has indicated that the terminal rate is approaching, markets remain unsure of whether this means another 25bps or 50bps of easing. Currently the bias is for the former, but should the BoE forecasts support the case for cumulative 50bps, this risks a weaker GBP on a gilt market rally," BofA adds. 

Feb 4 (Reuters) - USD/JPY technical and fundamental drivers are bullish, but FX traders could be mindful of continued intervention risks. The yen is on track for its fourth straight daily fall versus the greenback ahead of national elections. Prime Minister Sanae Takaichi is seeking voter backing for increased spending, tax cuts and a new security strategy that is expected to accelerate a defence buildup.

USD/JPY's rebound has now broken above the Ichimoku cloud, which currently spans the 154.09-156.30 region, a daily close above which would add to the upside potential for a retest of the 2026 159.45 probe. USD/JPY last week failed to sustain the break under the 152.48 Fibo, a 50% retrace of the 145.50 to 159.45 (September to January) EBS rise, setting up a bear-trap: which occurs when a market breaks below a technical level but subsequently reverses and is usually a bullish sign. However if there is direct intervention from the authorities, there is a large technical gap between the October 3 147.45 close and the October 6 149.02 open on the daily chart that could be filled.
Daily Chart


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

Given their forward-looking read on volatility, FX options are often a reliable bellwether for broader sentiment, and right now their price action is still signalling concern about further EUR/USD upside, despite the pullback from 1.2084.

Implied volatility — a core component of any FX option premium — surged to 10-month highs as the USD suffered broad losses last week.

EUR/USD’s benchmark 1-month expiry spiked to 9.5 after taking out the large 1.2000 barriers, up sharply from 2026 lows at 5.0 just a week earlier. That same contract has since slipped back to 6.0 as spot has consolidated.

Risk reversals told an even louder story. The implied volatility premium for EUR/USD topside over downside strikes jumped to its highest levels since 2020 across all expiries, with the 1- to 3-month tenors climbing to 1.5 from a neutral stance the week before.

And while those premiums have edged lower, the retreat has been modest — 1-month met demand at 0.6 and has already rebuilt to 0.8 in favour of EUR calls over puts. The skew still reflects lingering fear of further EUR/USD gains.

The strong positive correlation between EUR/USD spot and implied volatility reflected clearly in that risk-reversal premium and recent price action shows that any renewed spot strength would lift implied volatility again. This reinforces the market’s perception that upside carries the greater risk. Trade flows are also leaning EUR-positive. EUR call RKO structures have remained popular since the initial spot surge, offering buyers a cheaper way to position for EUR/USD appreciation compared with standard vanillas.

EUR call spreads have also been in demand, allowing traders to secure upside exposure while reducing premium outlay by selling another EUR option. Notably, both structures are better suited to a steady EUR/USD grind higher rather than a repeat of last week’s explosive rally, but were another sign that traders are still positioning for further upside, in a more controlled fashion.

Related comment - ECB and BoE signals from the FX options market
EUR/USD FXO implied volatility


EUR/USD risk reversals


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• When BOJ sold USD/JPY in July 2024 traders were betting $1bln on euro dropping

• This year traders are wagering $20 billion that the euro rises

• While EUR/USD may rise if BOJ sells again - euro longs will provide restraint

• Yen positions are much different than when BOJ last sold dollars

• Action to support the yen may drive gold to new heights

• Growing risk of FX intervention to support the yen

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Growing risk of FX intervention to support the yen

• After BOJ sold USD/JPY in 2022 EUR/USD surged from 0.9528 to 1.1034

• Following intervention in 2024 EUR/USD rose from 1.0710 to 1.1214

• Should BOJ sell again, EUR/USD currently 1.1826, may far exceed 1.20

• A close over the 200-MMA at 1.1939 would be a first

• Action to support the yen may drive gold to new heights

• Shallow pullback points to 1.25–1.28

•
EURUSD and the 200-MMA


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Growing risk of FX intervention to support the yen

• Gold was $2318/oz before BOJ sold USD/JPY in July 2024

• The precious metal reached $2790/oz in Oct 2024

• Gold $1614/oz in Sep 2022 rose to $1960/oz after BOJ sold USD/JPY

• The flash crash to $4403/oz purged longs, freeing gold to rise

• Gold has risen to $5090/oz in the wake of the crash

• Less to stop gold rising toward $5724/oz if BOJ sells USD/JPY again

• Indeterminate source of gold demand may spell trouble for the dollar

•
Gold targets


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Cable rises to 1.3721 (Feb high) before UK January final services PMI at 0930 GMT

• 54.3 f/c, as per flash estimate (services sector is dominant segment of UK economy)

• 1.3651 was Tuesday low (1.3625 was Monday base, lowest level since Jan 23)

• NIESR predicts UK jobless rate to rise to 11-year high of 5.4% this year

• Trump signs spending bill that ends four-day U.S. government shutdown

• Democratic senators seek delay in nomination proceedings of Warsh for Fed chair

GBPUSD


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

• USD/THB lower but going nowhere fast, support at 31.40 intact

• Fresh bounce in gold prices back above the 5000 mark weighs

• Spot gold last at $5089.0 per ounce, +3% in Asian dealings

• USD/THB last at 31.55, traded amid 31.53-31.69 range so far

• Caution ahead of elections on 8th Feb remains supportive of pair

• SET +0.46%, regional markets mixed

• Related
THB

(Catherine Tan is a Reuters market analyst. The views expressed are her own.)

• Shares of Lachlan Star rise as much as 60% to A$0.12, their highest level since late-October 2023

• The mineral explorer acquires high-grade New Waverley Gold Project, located in the Norseman Mining District, Western Australia

• Adds that project comprises a significant tenement package, including two mining leases, located along the northeastern continuation of the Woolyeenyer Formation, a key host to the multi-million-ounce gold deposits

• About 4.8 million shares change hands, 25.9 times the 30-day avg

• Lachlan stock up 73.1%, YTD

(Reporting by Anjali Singh in Bengaluru)

• AUD/JPY remains very much bid following the RBA's rate hike yesterday

• Asia 109.20 to 109.82 today, adding to 108.00 to 109.54 rally yesterday

• No doubt RBA's hawkish tone, another hike this year adding to bull run

• AUD/JPY now above 109.67 peak July 11, 2024

• Highs of 109.72, 109.74 dating back to May and March 1991 also pierced

• Moves towards 114.75 peak seen in October 1990? 1990 high 123.70 in August

• Talk of fresh carry demand, could propel AUD/JPY higher

• Related , , for more click on [FXBUZ]

AUD/JPY daily:


AUD/JPY monthly:

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

• BTC languishes still, even as gold rebounds a second day

• Last $76,450 after Tuesday's -2.9% drop due to risk aversion

• BTC continues to trade like a risk asset rather than a haven

• Gold's two-day bounce of around +8% fails to inspire BTC

• BTC will struggle as top of Bollinger downtrend channel drops

• Ceiling of channel nearly coincides with psych barrier $80k
BTC


(Ewen Chew is a Reuters market analyst. The views expressed are his own.)

• USD/JPY on hold near top of 154.08-156.29 daily Ichimoku cloud

• Asia 155.70-91 EBS so far, resistance above 156.00, high yesterday 156.08

• Offers likely in place 156.00+, likely includes Japanese exporters

• Market still net short JPY too, paring of these positions eyed too

• Support seen solid for now at 154.44-155.38 ascending hourly Ichimoku cloud

• View taking hold that PM Takaichi in essence for weak yen a la Abenomics

• Should keep USD demand strong on dips from stock hedgers, Japanese importers

• Some bounce in JGB-US Treasury rate differentials yesterday, USD supportive?

• In options, chunky expiries today around 155.00, at 155.50, 156.25

• Massive $1.7 bln in expiries between 156.45-55 strikes today above, cap?

• Risk mood not so good today on increased geo-political tensions

• Related comments , , ,

• Also , US news , ,

• On US markets , , ,
USD/JPY:

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

(Amends Tuesday reference to hike in second line)

• AUD/USD +1.1% from Tue 0.69465 low, traders still assessing RBA CPI outlook

• Markets pondering further hikes to come in wake of Tue's starkly hawkish hike

• Rising geopolitical tension tempering the recent DXY rally

• U.S. military shoots down Iranian drone approaching aircraft carrier

• AU Jan S&P composite PMI 55.7 (prior 56.0), Dec trade balance due Thur

• Range Asia 0.7015-245, support 0.6905 0.6660 0.6420, resistance 0.7158
AUD Daily 200-DMA


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

ANZ Research maintains a bearish bias on JPY over the medium-term.

"Looking beyond the past week’s volatility in the USD/JPY, we still see a case for the pair to rise back towards 160. The BoJ meeting recently showed that, although tariffcrelated uncertainty has eased, policymakers are uncertain about whether inflation and growth forecasts will be met. This supports our view that the BoJ will raise interest rates once more in April to a terminal rate of 1%. This 1% rate is not enough to close the interest rate differential with the USD (or most other G10 currencies)," ANZ notes 

"We see scope for USD/JPY to rise in coming weeks, as intervention fears wear off..The 8 February snap election may prove a catalyst for further JPY weakness if the outcome favours the LDP. At the very least, we can expect the JPY to underperform on G10 crosses generally, such as against the AUD and NZD, near term," ANZ adds.

• NZD/USD -0.3% from Wed 0.60639 high as jobs data shows worrying signs

• NZ Q4 unemployment 5.4% (poll 5.3%), jobs growth +0.5% q/q (poll +0.3%)

• Recent DXY upswing fading as geopolitical tensions escalate again

• U.S. shoots down Iranian drone approaching aircraft carrier

• NZD upswing remains intact for now, topside target: Jul 1 0.6120 high

• Range NZ 0.6034-639, support 0.5870 0.5730 0.5580, resistance 0.6120
NZD Hourly Bollinger Study & DXY Daily 55-DMA

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

• AUD/USD +0.9% late Tues, but well below 0.70505 session highs

• RBA's hawkish hike accompanied by higher CPI forecasts will underpin AUD

• U.S. House of Representatives approves funding to end latest shutdown

• Broad USD index -0.2% as rally inspired by the Warsh Fed nomination fades

• Geopolitical tensions re-escalate as U.S. says it shot down Iranian drone

• AUD likely to push back towards resistance near 3-year 0.7158 high

• AU Jan S&P PMIs due Wed, Dec balance on goods Thur (poll +3.25 bln)

• Overnight range 0.6981-0.70505, support 0.6660 0.6420, resistance 0.7158
AUD Weekly 52-WMA


DXY Daily 55-DMA

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

• GBP$ reversed early NorAm weakness, +0.18% at 1.3691; NorAm range 1.3651-1.3707

• Pair anchored near 1.37 after post-Warsh nomination slide as traders await BoE on Feb 5

• Expected rate hold, Rtrs f/c 7-2 vote to hold; vote and presser in focus for clues to policy

• BoE's Bailey has said inflation could fall near 2% in April or May; guidance crucial

• Wednesday's UK svcs PMI , f/c 54.3, not likely to hold sway on BoE barring a blowout

• GBP$ res 1.3714 Monday high, 1.3734 falling 100-HMA, 1.3794 upper 30-d Bolli

• Supt 1.3651 Tues low, 1.3634 daily conversion line, 1.3535 rising 30-DMA

GBP Chart:


(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

Credit Agricole CIB Research reviews the February policy meeting.

"The RBA raised its cash rate by 25bp to 3.85% as widely expected. The Board’s decision statement as well as the SMP were hawkish, indicating that the RBA has performed an about-turn on inflation within the space of five months, having cut rates in August," CACIB notes.

"AUD/USD has been lifted by the RBA’s hawkish hike and cleared the 0.70 level. The next important technical resistance level is 0.7050, which the exchange rate failed to close above last week leading to a rapid retreat...AUD/USD has a chance of getting above this important technical resistance level, which would clear the way for more upside," CACIB adds.