USD/TRY options had been warning of USD/TRY risk, and today it posted new record highs at 7.2900.
Options added more premium to warn of further risk, thus leveraging with low delta TRY puts may be prudent nL1N2F80D6.

EUR/USD options have posted significant gains beside the FX rate over recent sessions - one-month implied volatility to 8.6 from 6.1 in July and EUR calls on one-month risk reversals to new highs since 2016 at 0.85, if ignoring the early March panic pricing.
However, some profits are being taken, which may suggest a EUR/USD top is in place for now, or further gains are seen as limited ahead of 1.2000 barriers nL1N2F80Q3.

However, a minor setback would be healthy for the trend, which is still intact.
One U.S bank eyes 1.25 this year and 1.30 next nL1N2F80AA.

GBP/USD stays focused on March highs and barriers above 1.3200 - a break of which opens December highs at 1.3500, with reports of demand for options that would benefit from that move nL1N2F8086.

For more click on FXBUZ

Credit Suisse discusses USD/JPY outlook and sees limited scope for sharp moves below 105 under the current market conditions,.

"Last week we outlined our reasons for expecting a period of consolidation in G10 FX, having previously been mostly USD bearish for around 3 months, keeping our key near-term forecasts unchanged (EURUSD 1.18, USDJPY 105, AUDUSD 0.72).

We highlighted factors such as extreme short USD positioning, consensus greenback bearishness and a relative shift in new negative surprises on the Covid news front away from the US and towards other centres such as the EU and Australia. The debate around US fiscal stimulus also seems to be (very slowly) moving in the right direction towards an acceptable deal, with Senate majority leader McConnell saying he’s ready to support a package despite seeing “some problems with certain parts of it”, removing some USD-specific risk against other currencies in the process," CS notes. 

"In the case of USDJPY, we argued that as long as US equity and credit markets remain well behaved, it is hard to see moves below 105 being extended," CS adds. 

Citi maintains a bullish bias on EUR/USD and adds a long exposure via a 2.5 month (19 October 2020) EUR/USD call spread.

"We remain bullish EURUSD as per our CitiFX Strategy H2 2020 Global Outlook and still see EUR upside vs USD and the majors. Three potential major drivers of EUR and EURUSD upside to us are: i) Low real rates supporting risk appetite ii) shifting investor appetite towards Europe amid a cyclical global recovery iii) risk premia around Biden winning the US election,' Citi notes. 

"The confluence of these three factors should see a both persistent USD offer and EUR bid, leaving 1.25 as a conservative target ahead of the election," Citi adds. 

• GBP continues to benefit from the BoE's message on negative rates

• BoE said negative rates may be "less effective" at helping economy

• See: nL8N2F81TQ. Cable up to 1.3185, 15 pips shy of March 9 high

• 1.3200 was origin of the slump to 1.1413 (35-year low on March 20)

• Stops may be sheltering above 1.3210 -- the high on Jan 31 and Jan 7

• 1.18-1.44 is 12-month GBP/USD forecast horizon - Reuters poll nL8N2F72YD

• FX traders have been exiting USD/JPY all week, according to EBS flow data

• It's August -- USD/JPY shorts needn't panic nL1N2F409E

• USD/JPY's recent short covering was capped at Monday's 106.47 peak

• USD/JPY "bull trap" weighs, bears eye key 105.07 Fibo below nL1N2F808E

• 105.07 Fibo is a 61.8% retrace of 104.20 to 106.47 (Fri to Mon) rise

• Thursday's range has been a tight 105.40-69 EBS data range

• Japanese bids at 105.30 in size, but some stops mixed in below

Sterling is benefiting after the Bank of England poured cold water on doves hoping that the central bank might experiment with negative interest rates.

On Thursday, the BoE said negative rates might be less effective now as a tool to stimulate the economy, although "it will continue to review the appropriateness of a negative policy rate as a policy tool" nL8N2F81TQ

Negative BoE rates would hurt sterling -- so anything that appears to lessen the risk of that happening helps GBP.
This was reflected by the pound's rise to a five-month high against the U.S. dollar, 1.3184, after the BoE's monetary policy announcement.

The rise to 1.3184 comes after July saw the pound rack up its biggest monthly gain against the U.S. dollar, 5.5%, since May 2009.
Friday's CFTC data is expected to show that IMM speculators reduced their net GBP short position from an eight-week peak in the week to August 4.

Related comment: nL1N2F507X

For more click on FXBUZ

• AUD/USD falls to 0.7180 after notching 0.7217 intra-day high at 0609GMT

• Intra-day high was notched as GBP/USD scaled a five-month peak nL1N2F8081

• 0.7180 = intra-day low (0.7185 was Asia low; 0.7187 was NY afternoon low)

• Profit-taking on longs has weighed on AUD/USD since it hit 0.7241 Wednesday

• 0.7241 = 18-month high nL1N2F72R6. RBA SoMP and Ellis speech due Friday

• Melbourne enters strict new coronavirus lockdown nL4N2F80OY

  
  

• EUR/USD setback from Wed's 1.1905 peak based 1.1863 Asia Thurs

• Marginally extends Fri's 1.1908 2-yr high to 1.1916 early London

• Profit taking was expected, but setbacks proving limited so far

• EUR/USD has come along way fast - faces stiff resistance toward 1.2000

• 1.1950 option barriers - huge 1.20 nL2N2F20HC, related defence

• Awaits US jobs data now - big miss could prove catalyst for 1.20 test

• As could inability for U.S congress to agree jobs package nL1N2F7099

  
  

• Cable rises to 1.3184 after BoE keeps monetary policy unchanged by 9-0 votes

• See: nL8N2F81TQ. 1.3184 is high since March 9 (1.32 was high that day)

• BoE: Negative rates at this time could be less effective nL9N2DP020

• BoE upwardly revises its 2020 UK GDP forecast to -9.5% from -14% in May

• 1.3160 (Wednesday's high) is now a GBP/USD support level

• The retreat from Wednesday's high based at 1.3108 (Tuesday's high)

• Option expiries Thursday August 6 at 10-am New York/3-pm London

• EUR/USD: 1.1700 (1.1BLN), 1.1715-25 (1BLN), 1.1850 (250M), 1.1900 (250M)

• EUR/CHF: 1.0620 (407M), 1.0850 (283M). GBP/USD: 1.3000 (564M)

• AUD/USD: 0.7120 (473M), 0.7150 (520M), 0.7195-0.7205 (740M), 0.7250 (258M)

• USD/JPY: 105.00 (2.7BLN), 105.25 (660M), 105.50 (330M), 105.60-65 (1BLN)

• 105.75-85 (1BLN), 106.00 (450M), 106.25 (1BLN), 106.50 (715M)

• EUR/JPY: 122.00 (576M). AUD/JPY: 74.80 (640M), 76.25 (340M)

  
  

• AUD/USD opened 0.47% higher at 0.7193 after topping out at 0.7241

• It was bid in early Asia as USD broadly eased and it traded to 0.7212

• Price reversed lower around the time the Aus government commented on growth

• PM Morrison said impact of Victoria Lockdown would push up unemployment nL4N2F80OY

• AUD/USD traded to 0.7185 before finding buyers of AUD/USD and AUD/NZD

• Heading into the afternoon the AUD/USD was trading around 0.7200

• Support is at the 10-day MA at 0.7161 and break would warn of correction

• Resistance is at the 2019 high at 0.7295 with sellers tipped ahead of 0.7250

• For more click on FXBUZ

• EUR/USD opened 0.56% higher at 1.1868 after trading as high as 1.1908

• It traded a 1.1863/86 range in Asia and is 1.1870/75 into the afternoon

• EUR/USD trending higher with the 5, 10 and 21-day MAs in a bullish alignment

• Resistance has formed at a double-top at 1.1905/10

• Support @ the 10-day MA @ 1.1784 and close below would warn of top in place

• A clear break above 1.1910 would put the 1.2000 level in focus

• Sentiment is bullish as US economic and political uncertainty weighs on USD nL1N2F71NInL1N2F71J2

• For more click on FXBUZ

• AUD/USD below 0.7190 after trading to 0.7212 earlier

• Australian government says Victoria lockdown to negatively impact GDP nS9N2EK013

• Market likely looking for excuse to shed longs, as impact not surprising

• AUD/USD support at the 10-day MA at 0.7161 and break eases upward pressure

• For more click on FXBUZ

• The USD broadly bounced during the uS session, but sellers are returning

• AUD/USD moving higher and is around 0.7210 after closing at 0.7193

• There is talk of sellers ahead of 0.7250 and it topped at 0.7241 yesterday

• AUD/USD has resumed short-term trend higher after a small correction

• The 5-day MA is back above the 10-day MA and tilting higher again

• Resistance is at the 2019 high at 0.7295

• For more click on FXBUZ

• EUR/USD traded to 1.1905 to form a double top at 1.1905/10

• Move higher prompted by weaker than expected ADP jobs data nAQN02XH8H

• USD regained some ground after better than expected ISM services reading nN9N26W01B

• The broad USD rally late in the day left the EUR/USD at 1.1865 - up 0.63%

• Trend higher still in place with 5, 10 and 21-day MAs in a bullish alignment

• Support at yesterday's 1.1793 low with 10-day MA at 1.1784

• A break above 1.1910 targets the 76.4 of the 1.2556/1.0636 move at 1.2102

• For more click on FXBUZ

• AUD/USD soared to a fresh 18-month high at 0.7241 before reversing lower

• It still managed to gain 0.47% for the day - closing at 0.7193

• Talk of large selling ahead of 0.7250 encouraged profit taking

• USD selling abated in the US afternoon and USD/CNH climbed off the lows

• Support at the 10-day MA at 0.7161 and break eases upward pressure

• Resistance is at the 2019 high at 0.7295

• For more click on FXBUZ

The dollar fell after disappointing ADP nAQN02XH8H jobs data tempered expectations ahead of Friday's non-farm payrolls report, but it avoided hitting a new post-coronavirus low with help from strong ISM services nN9N26W01B and solid earnings reports.

Hopes for a government stimulus deal also tempered dollar losses but was offset by a weak employment gauge that marred the otherwise upbeat ISM non-manufacturing report.

EUR/USD reached a high of 1.1905 on EBS, just shy of last Friday’s 1.1908 two-year peak.

The dollar index also found support just above July’s 92.54 trough as traders weighed the 16-month high in service-sector PMI against evidence the jobs recovery was slowing, awaiting clarification in Thursday’s jobless claims and Friday’s employment report.

The dollar has been losing ground since March when the Fed cut rates toward zero, ramped up QE and expanded lending in every way imaginable, including international FX swap lines.

Rebounding yields today received a boost from an unexpectedly large Treasury refunding announcement, global risk-on flows and reaction to the headline ISM beat, though a seven-year low in TIPS yields dimmed a bullish dollar response nL1N2F716P.

And the rally in S&Ps slowed in U.S. trading, sapping dollar-selling impetus.

EUR/USD traders have the nice round 1.20 target on the agenda if the 1.1908 highs are cleared before or after the jobs reports on Thursday and Friday.

Failure to take out July’s high or a clear rejection by the 1.20 objective nL1N2F70TZ could usher in another round of long profit-taking given record net spec IMM longs, still stretched oscillators and some concern the allure of European assets over U.S. assets may be waning nL8N2F55RP.

Sterling, too, was within breathing distance of its pandemic rebound high nL1N2F71K4, as well as the March pre-coronavirus swing high at 1.3200 that appears pivotal.
Thursday's BoE meeting is the next local event risk, though little change is expected and cable looks far more linked to the fortunes of the S&P 500 than anything in the UK.

USD/JPY ebbed with the dollar nL1N2F71P3, but its pullback was limited by the 105.33 lows holding the 50% Fibo of the 104.19-6.47 rebound since July 31.

With the late-July breakdown below mid-July range lows basically erased by the Friday-Monday short squeeze, bears are more reluctant to pile into new shorts, particularly before non-farm payrolls and the conclusion of U.S. coronavirus relief bill negotiations.

High-beta currencies, except the beleaguered Turkish lira, rallied against the dollar, helped by rising oil and metals.

For more click on FXBUZ

• NY opens near 0.7205 on US$ selling & yuan gains nL1N2F70ES

• Equities, copper & AUD/JPY gains help buoy AUD/USD in early NY

• Overnight rally extends to 0.7241 in NY but bulls run out of gas

• US$ selling fades, USD/CNH bounces above 6.9400, AUD/USD slides

• NY gains erode, pair nears 0.7190 late but is up near 0.45% on the day

• The long upper wick on today's candle could be a warning for longs

• For more click on FXBUZ

TD Research discusses the current drivers of the FX markets.

"Expectations of further stimulus bets have sparked a turnaround Tuesday, undermining the USD once again. The catalyst falls to the prospects that US policymakers have made some progress on stimulus discussions. The hopes are that legislation will pass next week, which has offered another dose of fuel for risk sentiment.  Meanwhile, gold has marked new highs while the EUR sits within striking distance of 1.20," TD notes.

"We discuss the shifting correlations of FX to our risk gauge GMRI, highlighting the shifting nature of a safe haven. It will take years to officially challenge the USD's reserve status but that doesn't mean we can't see a major asset allocation shift. Equally important, we note the surge in the USD's beta to MSCI World (ex-US) during the past four years. A sign that equity flows will remain important drivers of FX," TD adds. 

• GBP/USD ending NorAm +0.44% at 1.3125, NorAm range 1.3160-1.3115

• ADP U.S. employment miss nL1N2F70JG, weak ISM N-Mfg emp data weigh on USD

• Low growth, Congress aid logjam & rising COVID cases weigh on USD

• Sterling bulls gird for another run at trend high 1.3170 nL1N2F70UW

• Pair finds resistance at 1.3160 ahead of Friday high 1.3170, Mar 9 1.3200

• Retracements shallow hint bulls in control, Dec 31 high 1.3284 in focus

• EUR/GBP +0.2% at 0.9045, Wed range 0.9057-0.9013 on upbeat EU growth tones

Credit Suisse maintains a bullish bias on EUR/CHF, expressing that via holding a long position targeting a move towards 1.10.

"We remain biased mildly higher and continue to look for another challenge on 1.0832/38. A sustained and closing break above here in due course would then reinforce thoughts of a broader change in trend direction to the upside and see resistance next at the 78.6% retracement of the May/July move lower at 1.0849/50 and eventually back up at the 1.0916 high of June," CS notes. 

"Support is seen at 1.0732/30, just shy of 1.0720/12, where we would expect to see a more concerted effort to hold," CS adds. 

• Relentless demand for options that would benefit from continued spot gains

• Market makers clearly concerned - significant rise in option prices

• Implied volatility marches higher across the entire 1-12-month curve

• 1-month looks to retest recent 8.6 peak - it's up 2.5 since mid July

• 1-year up a huge 1.0 in a week to test 8.0 now

• Risk reversals show continued demand for EUR call options (topside)

• Risk reversals eye multi year highs, big traded volumes too nL1N2F708T

• Huge barriers 1.20 nL2N2F20HC. US near fiscal cliff edge nL1N2F7099

  
  

  
  

  
  

Citi discusses JPT technical outlook and prefers buying JPY crosses on dips than trading USD/JPY around current levels.

"USDJPY flashing more red than the Japanese flag. Our Asia trader also notes that the USD leg continues to drive the pair. XXXJPY on the other side, trades solidly across on the back of not solid equity but also some local interest.

"Expect USDJPY to stay around here 105/106.50 range for now. And now it seems extra difficult for USDJPY to go another leg lower quickly as it seems the market went short last week. Prefer to add XXXJPY on dip than touching USDJPY here," Citi notes. 

MUFG Research maintains a bearish USD/JPY bias, expecting the pair to trade towards 103 through year-end.

"The yen correlation with equity markets has been very low while the correlation for most other G10 currencies has been considerably higher. The negative correlation between USD and equity markets has therefore resulted in sharper USD depreciation versus other G10 currencies than versus the yen. Eventually though catch-up is likely and that means continued downward pressure on USD/JPY reflecting broader conditions," MUFG notes. 

"We have had a long-term view of gradual JPY appreciation. The aggressiveness of the COVID policy response has helped curtail JPY gains but the general global backdrop is consistent with JPY strength and eventual levels for USD/JPY below the 100 level are possible going forward," MUFG adds.