• Broader de-risking feeds into a textbook risk off move - AUD (-1%) weakens

• While AUD has held up well against geo risks - crowded longs remain a known risk

• Traders have so far been rewarded for holding - largely due to rising RBA rate hike bets

• However, stretched positioning does create the condition for a disorderly unwind

• Thus, near-term risk-reward for longs look stretched near mid-0.71s

• That said, any corrections will offer better entry points for longer-term buyers

• Elsewhere, AUD/NZD remains the clean AUD expression amid the flight to safety risk
AUD positioning


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

ANZ changes its RBA  call and now expects a hike at next week's March meeting.

"We expect a 25bp rate hike from the RBA in its 16–17 March meeting, though the decision will not be as clear cut as February’s. Beyond the March meeting, we still expect an additional 25bp hike in May," ANZ notes.

"We then expect a pause while the RBA assesses whether the increase in the cash rate is sufficient to contain the inflation risks. We expect this pause will also give the RBA time to assess geopolitical developments and the global economic outlook," ANZ adds.

Sterling is likely to face continued downward pressure in the near term as a toxic combination of heightened geopolitical instability and rising energy costs undermines the UK’s economic resilience. The resurgence in risk-off trading has intensified following today’s Iranian attacks on shipping and oil storage facilities, events that suggest the Middle East conflict is not abating. These geopolitical shocks are driving oil prices higher, lifting global inflation expectations. This shift represents a significant blow to global growth prospects and has sent sovereign yields climbing, reigniting acute fiscal concerns.

In the UK, 10-year Gilt yields are currently trading at 4.74%, near six-month highs and well above February lows by 4.23%. Rising gilt yields have traders questiong the sustainability of the UK government’s fiscal position, a factor that has historically weighed on GBP/USD.

The technical outlook has soured considerably, as sterling’s inability to remain above its 200-DNA at 1.3443 adds a heavy layer of resistance to its current offered tone.

This technical failure, occurring amid volatile oil prices and surging global yields, leaves the pair exposed to further downside. Immediate support is identified at the bruised daily conversion line of 1.3376, followed closely by today’s intraday low of 1.3362.

Should these levels give way, the lower Bollinger Band at 1.3306 stands as the next major objective for bears. Conversely, any relief rallies will likely find the path blocked by the 10-day SMA at 1.3406 and the aforementioned 200-day SMA, with the 21-day SMA at $1.3475 marking a more formidable ceiling for the medium term.
Sterling Chart:


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

MUFG Research maintains a short EUR/USD position targeting a move towards 1.13.

"Fresh disruption to global oil supply will keep upward pressure on prices limiting the dampening impact from yesterday’s announcement from the International Energy Agency (IEA) that they have agreed to discharge a record 400 million barrels from reserves. It compares to the releases totalling 183 million barrels in 2022 after the Ukraine conflict disrupted global supply. It would be roughly equivalent to around 3-4 weeks of oil supply that normally passes through the Strait of Hormuz. However, it will take time for the reserves to be released which is the main problem in addressing the current supply bottleneck...," MUFG notes.

"As a result, we are not confident that we have seen the worst of the oil price spike. It is one of the reasons why we recommended a short EUR/USD trade idea," MUFG adds.

Bank of America Global Research previews next week's RBA March policy meeting.

"We expect the RBA to hike by 25bps in March, contrary to consensus and market pricing for a hold. The oil shock introduces a material upside inflation risk, and given above-target inflation and a tight labour market, we see no compelling reason to delay the inevitable," BofA notes.

"Prior to the Iran conflict, we saw a strong case to hike further in 2026 but assumed the RBA's cautious approach would see them wait to hike in May. The conflict has shifted the distribution of risks, and in our view, a hike in March would reinforce inflation credibility and be consistent with the Board's approach to respond to "the evolving assessment of the outlook and risks to guide its decisions," BofA adds.

• AUD/USD fell overnight, traded 0.7161-0.7111, NY opened near 0.7130, down -0.27%

• Middle east tensions rallied oil, helped drive investors into safe-haven assets

• AUD/USD dragged lower as AUD/JPY, stocks fell and the US dollar firmed up

• Higher US yields also helped to weigh down AUD/USD

• Daily RSI is falling but AUD/USD consolidating gains off the March 9 daily low

• Rising monthly RSI & pair's hold above the 120-month MA are bull signals

• US weekly jobless claims, Jan. housing starts are data risks today
audusd


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

• USD/JPY has seen a 158.68 to 159.24 range, on Thursday, EBS data shows

• Dollar bears are trapped, USD index chart shows, expect more gains in coming sessions

• FX option flows don't rule out USD/JPY breaking above 160.00

• That would heighten the risk of yen intervention by the Japanese authorities

• Direct intervention would likely see the early Oct 2025 gap between 147.45 and 149.02 filled

• USD/JPY and EUR/JPY tend to move in tandem, log correlations are high above +0.5

Correlation Chart


Daily Chart


Correlation Chart


Correlation Chart


Daily Chart


Correlation Chart


Daily Chart


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

• AUD/USD falls to 0.7112 as risk aversion weighs on risk-sensitive AUD

• Nikkei down 1% on higher oil, fears of prolonged Middle East war

• 0.7112 is the lowest level since Wednesday's 45-month high of 0.7187

• Rise to 0.7187 was spurred by growing expectation of RBA hike next week

• ANZ joins NAB, CBA and Westpac in forecasting RBA hike on March 17

• 0.72 is a resistance level beyond 0.7187 (last at 0.72 in June 2022)

AUDUSD


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

• Traders have wagered $20 billion that the euro rises

• EUR/USD dropped to 1.1507 EBS after U.S. attacked Iran

• Weak recovery failed below 200-DMA at 1.1677

• Pair since softening to 1.1532 following sell signal (21-DMA below 55-DMA)

• 1.1568 target for minor correction gains after trade war intensified exceeded

• Drop toward the 1.1408 target for a bigger correction may ensue

EURUSD


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

• Cable fell to 1.3363 in Asia as safe-haven USD strengthened on higher oil prices

• Brent rose to $100/barrel in Asia after Iran stepped up attacks on Gulf shipping

• 1.3363 is the lowest level since Monday (when USD jumped on oil's surge to $119)

• U.S. intelligence says Iran government is not at risk of collapse, sources say

• 1.3400 (ex-support point) is now a resistance level (1.3394 was Wednesday low)

• Goldman Sachs pushes back Fed rate cut forecasts to September and December

GBPUSD


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

• Shares of Lodestar Minerals surge as much as 37.5% to A$0.017, highest since January 27

• Stock logs largest intraday pct jump since February 23

• Metal explorer reports visible copper mineralisation at its Three Saints project in Chile

• More than 76.2 million shares change hands, 5.9x the 30-day average

• YTD, LSR up 29.2%

(Reporting by Nikita Maria Jino in Bengaluru)

• GBP/USD down 0.3% in Asia as dollar strengthens broadly on risk aversion

• Iranian strikes hit tankers near Iraq; Trump’s ‘war won’ claim rings hollow

• Brent crude surges over 9%, S&P E-Mini -0.9% as Iran war intensifies

• UK markets jolted, gilt yields close at highest in months on inflation shock

• UK 2-year yield jumped 14 bps; bets on BoE rate cut in 2026 were slashed

• UK home buyer sentiment hit by Middle East conflict worries- RICS

• Speech by BoE Governor Andrew Bailey at the FSB payments summit Thu eyed

• Supports 1.3340-50, 1.3300-10, resistance 1,3400-10, 1.3450

• Wednesday range 1.3394-1.34555, Asia range 1.3367-1.3406
UK inflation expectations are elevated:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• USD/JPY blipped up to 159.24 EBS into the Tokyo fix before easing back

• Almost every Tokyo fix sees good Japanese importer demand

• This has been an on-going affairs since last spring-summer

• Weak yen and higher cost of imports also on inflation abroad main factors

• Also many importer had upside option barriers taken out in yen falls

• USD/JPY off to 158.83 so far as demand abated, on FX intervention risk

• Nothing from Japan's MOF so far on yen moving into 159 handle

• FinMin Katayama, other govt officials at Diet discussing budget still

• Related , for more click on [FXBUZ]

USD/JPY hourly:

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

• AUD/USD -0.15% Thur after touching a fresh 0.71875 45-month high overnight

• RBA rate hike bets have firmed since RBA Deputy Governor Hauser spoke Tue

• Trump remarks suggest ongoing entanglement as Iran war rages on

• Iran warns of oil at $200 a barrel, hits three ships in the Gulf

• U.S. initial jobless claims due Thur, Q4 GDP update & Jan Core PCE Fri

• Break above 0.7158 resistance opens AUD up for material extension higher

• Range Asia 0.7124-55, support 0.6944 0.6900, resistance 0.7248
AUD Hourly Bollinger Study & DXY Daily 55-DMA

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

• USD/JPY up to 159 handle, high yesterday 158.98, Asia 158.89-159.13 EBS

• Market heading for tests of 159.23 high January 23, 159.45 January 14?

• 160.00 still seen line in sand for many players on FX intervention

• Expect Japanese official jaw-boning on weak yen today

• Any FX intervention will have tacit backing of US authorities

• This especially following Trump '301 probes' into 16 trading partners

• US yields up with crude oil up again, follows steady US CPI data

• JGB-US Treasury rate differentials up some but still below Monday wides

• Large USD/JPY option expiries today at 158.00-05, 159.50, 160.00

• Related comments , , , also

• US markets , , ,

• On '301 probes' ,

• On US data , , for more click on [FXBUZ]

USD/JPY:


Japan's history of supporting yen Japan's history of supporting yen:


NYMEX crude oil futures:

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

• Australian gold stocks fall as much as 2.3%, set to snap two consecutive sessions of gains, if current trend holds

• Gold prices overnight edged lower, weighed down by looming inflation concerns that bolstered expectations of higher interest rates [GOL/]

• Gold miner Northern Star Resources sheds 1.4% and Genesis Minerals loses 1%

• Stock has risen 1.3% this year, including day's moves

(Reporting by Roshan Thomas in Bengaluru)

• NZD/USD -0.6% from Wed 0.5948 high, DXY +0.3% as Iran war rages on

• Oil supply fears remain despite IEA proposal to release reserves

• Iran warns of oil at $200 a barrel, hits three ships in the Gulf

• NZ Q4 manufacturing sales -0.5% q/q, dairy and meat products -3.1%

• U.S. Feb core CPI +0.2% m/m, +2.5% y/y in line with expectations

• U.S. initial jobless claims due Thur, Q4 GDP update & Jan Core PCE Fri

• Range NZ 0.5908-19, support 0.5837 0.5710 0.5580, resistance 0.6092 0.6120
NZD Daily 55-DMA

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

Morgan Stanley Research turns neutral on AUD/USD in the near-term.

"Developments in the Middle East pose near-term risks to AUD/USD, so we remove our bullish stance but retain a bullish skew. We continue to expect AUD to outperform within G10. Australia should benefit from an improvement in its terms of trade, and on a relative basis Australia's LNG exports are particularly valuable due to relatively secure supply routes," MS notes.

"Australian growth is also resilient, inflation is firm, and yield differentials look favorable. Our economist expects the RBA to hike in May, with markets pricing further tightening, supporting capital inflows. Positioning remains long but no longer appears stretched," MS adds.

• AUD/USD +0.5% late Wed as markets price in Mar 17 RBA rate hike

• RBA Hauser's Tue remarks on oil and inflation firming rate hike bets

• Iran warns of oil at $200 a barrel, hits three ships in the Gulf

• Oil supply fears remain despite IEA proposal, Brent +5.4% & WTI +5.5%

• U.S. Feb core CPI +0.2% m/m, +2.5% y/y in line with expectations

• U.S. initial jobless claims due Thur, Q4 GDP update & Jan Core PCE Fri

• Break above 0.7158 resistance opens AUD up for material extension higher

• Overnight range 0.71375-875, support 0.6944 0.6900, resistance 0.7248
AUD Daily 200-DMA

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

The dollar climbed alongside crude on Wednesday as tensions over the U.S.-Israeli war with Iran and risks to Strait of Hormuz shipping eclipsed the IEA’s announcement of a record 400 million-barrel oil release. Iran warned oil could surge to $200 a barrel as its forces attacked merchant shipping in the Gulf and reportedly laid mines in the Strait of Hormuz. A senior Iranian military spokesman warned that any threat to Iran’s ports would make all regional ports legitimate targets, while Iran’s president said ending the war requires recognition of Iran’s sovereign rights and reparations. Israeli officials privately admitted there is no guarantee the war with Iran will topple its clerical leadership, also believing Washington is not close to ordering a halt. U.S. President Donald Trump said there's "practically nothing left" to target in Iran and that the war there will end "soon." He also backed the decision to release oil reserves. Later in the session, U.S. officials warned of possible Iranian-linked attacks on energy infrastructure in Iraq and potential drone threats to the U.S. West Coast. U.S. 2-year yields hit their highest since September as oil prices rose, with February CPI matching forecasts at 2.4% and core inflation steady at 2.5%.

The dollar index is holding support at its 10-day moving average, but fresh positioning remains limited amid Middle East uncertainty ahead of next week’s policy meetings. EUR/USD hit a two-session low near 1.1561 amid higher U.S. yields and a stronger dollar, with an inverted hammer reinforcing bearish signals below its 200-DMA at 1.1676. ECB officials warned that surging oil prices threaten inflation and said they would act quickly if price pressures start to stick.

GBP/USD stayed range-bound as traders avoid exposure, with the pound propped up by EUR/GBP’s drop to five-week lows as oil rises. Inflation pressures could shift the debate from when the Bank of England cuts to whether it cuts at all. British finance minister Rachel Reeves said she would consider action to shield households from surging energy costs.

USD/JPY extended its weekly advance as oil, the dollar, and Treasury yields rose, with crude holding gains despite a coordinated reserve release. The pair eyes its 159.45 YTD peak on further gains though intervention risks and option gamma helps slow its ascent.

AUD/USD retreated from a multi-year high near 0.7188 as firmer U.S. yields and a stronger dollar pulled the pair back toward its upper Bollinger band, despite bullish RSI and moving-average signals. Treasury yields were up 6-8 basis points as the curve steepened. The 2s-10s curve was up about 1 basis point to +57.0bp.

The S&P 500 fell 0.31%. WTI oil rose 4.7% on supply fears despite the record reserves release announcement.

Gold fell 0.28% while copper dropped 1.3%.

Heading toward the close: EUR/USD -0.35%, USD/JPY +0.55%, GBP/USD -0.01%, AUD/USD +0.41%, DXY +0.42%, EUR/JPY +0.21%, GBP/JPY +0.51%, AUD/JPY +0.97%.(Editing by Burton Frierson Reporting by Robert Fullem)

• NY opened near 0.7160 after 0.7114 traded overnight, rally extened in NY

• Rallies in stocks & USD/CNH drop toward 6.8635 helped lift AUD/USD

• Upward moves in gold, silver aided AUD/USD's rally to 0.7188

• US yields, US$ firmed up however while stocks, gold, silver fell & USD/CNH lifted

• AUD/USD fell below 0.7140, traded up only +0.27% late in the session

• Rising daily,monthly RSIs, hold above 10- & 21-DMAs are bullish tech signals

• Daily inverted hammer formed which may be a concern for bulls
audusd


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

Credit Agricole CIB Research sees 0.90 as the line in the sand for EUR/CHF.

"The SNB had already stepped up its anti-CHF jawboning at the start of last week, by warning that its readiness to intervene in FX wholesale markets has increased in the wake of recent developments on the international stage. But for now that has merely reined in continued CHF strength and, on a broader and real basis, the CHF is currently at its highest level since 2011," CACIB notes.

"We believe 0.90 in EUR/CHF could for now mark the line in the sand and given the sheer difference in the CHF effective exchange rates’ weights between the EUR and USD, only a significant drop in EUR/USD may eventually allow more slippage in EUR/CHF," CACIB adds.

(Typo)

March 11 (Reuters) - Cable subdued with narrow ranges reflecting a market that does not want to be offside ahead of the next geopolitical headline. Conviction is lacking as getting whipsawed is clearly the risk here. That said, GBP has held up well, largely on cross-driven moves with EUR/GBP grinding to five-week lows as longs are trimmed. The Iran conflict remains the wild card for sterling. With inflation already printing above target, an oil shock layered on top can quickly change the conversation from when the Bank of England cuts to if it cuts. Note that OBR’s David Miles said UK inflation could end the year at 3%, compared to 2% if energy prices remain at current levels.

Clearly the bond market is responding, with 10-year gilt yields back towards 4.70% and the curve pricing little in the way of easing. That suggests that the MPC could sit on its hands longer than many expect.

Next week, the BoE meets, which pre-conflict looked like it was teeing up a March cut, and now it is likely to be a wait-and-see. Most economists have already pushed back the base case to April, but if the conflict drags, we could see another kicking of the can to the second half of the year. With this in mind, the geopolitical news flow should continue to run the show.
BoE pricing


Justin McQueen is a Reuters market analyst. (The views expressed are his own); Editing by Lisa Shumaker ((Email: ))

Danske Research adds a short EUR/USD position to its portfolio targeting a move towards 1.12.

"We think the Middle East energy shock shifts the EUR/USD outcome space also beyond the first-order terms-of-trade effect. We now recommend a tactical short EUR/USD spot position with a horizon of 1-3M with a target of 1.1200," Danske notes.

"We acknowledge that the interest rate differential between EUR and USD has narrowed notably in favour of the former, but we do not expect this to last. In our view, the ECB is very unlikely to hike against a pure supply shock especially, when longer-term inflation expectations remain little changed," Danske adds.