• USD/JPY rebounded from Monday's early 132.555 lows as haven yen bids waned

• Pair still off 0.25%, a good result given Mon's lousy US data nL1N2ZR110

• Initial broad haven yen buying came after poor China data, PBoC rate cuts

• But even terrible US data couldn't keep US stocks from rising

• And Tsy yield drop on NY Fed and NAHB dives stalled before London's close

• USD/JPY are lower than before Fed's 75bp June & July rate hikes

• Prices still above cloud base & 100-DMA that's propped since last September

• Cloud base rises to 132.06 Tues, 100-DMA is at 131.45 and slowly rising

• Aug's 130.40 low was by the 100-DMA & 23.6% of 2020-22 rise at 130.365

• Tenkan & 10-DMA at 133.66/79 are first hurdles; 21-DMA key at 135.00

• IMM net spec longs smallest since flipping from short in March 2020

• But it's also less weight on prices if the Fed-led uptrend were to resume

For more click on FXBUZ

• AUD/USD fell sharply overnight, NY opened near 0.7040, slide extended

• Safe-haven buying of US$, yen in early NY sink AUD/USD to 0.7012

• Risk improves after US data nW1N2ZR001, US rates US2YT=RR soften

• Equities ESv1 turn positive, commoditiesHGv1 bounce off their lows

• AUD/USD rallied away from the 10-DMA, daily cloud base, pierced 0.7045

• Pair fell towards 0.7030 late in the day as USD/CNH neared 6.8000

• Techs are mixed; daily RSI falling but monthly rising, pair above 10-DMA

• A slew of Fed speakers this week are key event risks

• For more click on FXBUZ

• Two approaches to the 55-DMA were rejected when rally sellers emerged

• Overnight rally met sellers again, implies they're becoming aggressive

• EUR/USD fell below the 10- & 21-DMA, rising wedge base on daily charts

• Break of wedge base suggests recent rally was only corrective in nature

• Daily & monthly RSIs are falling again, implies downward momentum

• Break above 1.0370/1.0400 zone needed to reignite EUR/USD's rally

• Should 1.0100/50 support break a test of July's monthly low is likely

• For more click on FXBUZ

Bank of America Global Research discusses USD/JPY outlook and maintains a bullish bias over the medium-term.

"With lower oil prices and stalling outward M&A by Japan Inc., corporate JPY supply has likely peaked for now. However, investors' USD demand, another pillar of USD/JPY strength this year, could continue as the Fed's rate hikes boost the USD/JPY carry and hedge cost. In the last tightening cycle, USD/JPY declined and JPY strengthened after the Fed stopped hiking rates at end-2018 with developed market (DM) central banks unable to hike as much Meanwhile, in the preceding cycle before the Global Financial Crisis, USD/JPY rose and JPY weakened while the Fed held policy rate at 5.25% for 14 months after the final hike and DM central banks hiked as aggressively," BofA notes. 

"A combination of synchronized DM policy tightening and a long-hold after the final hike by the Fed would keep JPY undervalued. With the Fed's first cut priced for 2Q23, the risk is a strong US labor market, sticky inflation, and a hawkish Fed pushback against the market pricing making the USD/JPY strength last longer," BofA adds. 

EUR/USD fell to a five-session low on Monday after disappointing U.S. and Chinese data rekindled worries about slower global growth, renewing the risk of a drop below parity as technicals also flash warnings to longs.

Dismal Chinese retail sales and industrial output data nL4N2ZO0XF combined with a PBOC rate cut and massive downside miss in the Empire State manufacturing index nW1N2ZR001 heightened worries about global growth while euro zone struggles with potential energy shortages and falling Rhine river levels impacting trade nL8N2ZR1PR.

Euro zone and global interest rates reacted bearishly.
September 2023 Euribor FEIU3 prices rallied sharply as investors priced in a lower terminal ECB rate.
The dollar's yield advantage increased as German-U.S.
2-year spreads US2DE2=RR widened, weighing down EUR/USD.

Technicals highlight downside risks.
EUR/USD fell below the 10- and 21-day moving averages as well as the base of the rising wedge pattern on daily charts.
Falling daily and monthly RSIs reinforce bearish signals.

Investors now await a slew of Fed speakers this week.
A reiteration of hawkish risks would buoy the dollar.

Should risk aversion persist, EUR/USD could weaken, putting July's low in focus.

For more click on FXBUZ

MUFG Research maintains a bullish bias on the USD and a long exposure in spot vs the EUR and CAD.

"We argued on Friday that the US dollar is likely to resume strengthening given the likelihood that the Fed will be very reluctant to signal any shift in stance until there is data to corroborate the weaker July CPI report. The University of Michigan report on Friday provided an example of inflation disappointing with the 5yr-10yr inflation expectations climbing from 2.9% to 3.0%. The market consensus was for a drop to 2.8%. With the US equity market now having recouped 50% of the bear-market drop, the Fed’s battle with inflation is far from won," MUFG notes. 

"We have stated here before that a key avenue of impact for the Fed over the short-term was through tightening financial conditions. But that impact is being weakened by the upturn in risk appetite. That points to the need for maintaining hawkish rhetoric," MUFG adds.

Credit Agricole CIB Research discusses the latest readings from its positioning model in G10.

"Despite fresh selling interest last week, predominantly driven by Risk Reversals flows, the USD remains the biggest long in the G10 FX at present. Our FX flow data points at real money investor inflows, as well as banks, corporates and hedge fund outflows," CACIB notes.

"The GBP remains the biggest short in the G10 FX space despite fresh buying interest last week, predominantly driven by IMM flows. Our FX flow data points at bank, corporate and hedge fund inflows, as well as real money investors outflows," CACIB adds. 

• China data indicates slower growth nL4N2ZO0XF, PBoC cuts rates

• Data also stokes investors concerns global GDP will also slow

• Risk sours; equities ESv1, commodities HGv1DCIOc2, yieldsYTTc1 drop

• Safe havens US$, yen bought; USD/CNH nears 6.7860, AUD/JPY nears 93.60

• AUD/USD fell from 0.71255 & hit 0.7023, NY opened near 0.7035

• Techs are mixed; daily RSI falling while monthly RSI is rising

• August US NY Fed mfgUSEMPM=ECI, NAHB housingUSNAHB=ECI are risks in NY

• For more click on FXBUZ

• A positive weekly close and inside the weekly cloud

• Long upper daily candle shadows conflict

• Bearish divergence on 14-week momentum also a concern for bulls

• Cross also failed to hold an upside breach of the 100DMA

• With a USD move hurting both EUR and GBP the cross could pan out sideways

• We lean slightly bearish but need stronger signals to take a position

• Key levels to watch, 0.8434 Fibo and 0.8492 Frid high

  For more click on FXBUZ

• Friday close below daily cloud base-10DMA and trading away from the cloud

• Ichikomu cloud parameters are at 1.2138-1.2267

• Daily chart beginning to look ugly for sterling

• Price nudges below converging 21-30DMAS, currently at 12.02-1.2111

• We have taken a short at market for a drop to 1.1965

• A 61.8% Fibo from 1.1761-1.2291 is at 1.1963

• Stop placed tight above today's 1.2149 high

  For more click on FXBUZ

• AUD/USD eyes 0.7063 (last Thursday's low) after extending south from 0.7125

• 0.7125 was Asian session high -- before China unexpectedly cut key rates

• See: nL4N2ZO0XF. Yuan down to 1-week low vs USD on PBOC cuts nL4N2ZR0VW

• AUD can be used as a liquid proxy for the CNY. Iron ore fall hurts AUD too

• See: nL1N2ZR0A7. Iron ore is Australia's biggest export earner

• 0.7034, 38.2% Fibo of 0.6870-0.7136, is a support level below 0.7063

• Cable eyes 1.2100 as USD benefits from soft landing hopes for U.S. economy

• See: nL1N2ZO1UM. 1.2100 was Friday's low (after Michigan sentiment beat)

• 1.2149 was Asian session high. Raft of UK data due this week nL1N2ZR00N

• 30 of 51 economists expect another 50 bps BoE hike in Sept-poll nL8N2ZO1SF

• Truss 22 points ahead of Sunak in race to be UK's next PM-poll nL1N2ZP0BF

• IMM speculators reduce net GBP short to lowest since mid-March nL1N2ZR09C

• AUD/USD extends pullback, verging on 100 DMA breakdown

• Potential loss of support at 0.7080 will weigh it lower

• Could lead to test of Bollinger uptrend channel floor

• If it ends Mon below 0.7048, 38.2% Fibo support breached too

• These signals will persuade more AUD longs to bail

• China's dismal economic numbers spur rate cut nL4N2ZO0XF

• For more click on FXBUZ

• Trades -0.1%, as safe haven USD firmed after Asian data missed forecasts

• Inside day near the base of a 1.2108-1.2149 range - very busy on D3

• BoE to deliver another 50 bps lift in Sept as inflation soars nL8N2ZO1SF

• UK Treasury proposes plan to cut fuel costs extra £400 - Times nL1N2ZP0DN

• Charts - neutral daily momentum studies, 10 & 21 DMAs head higher

• 21 day Bollinger bands contract - signals net positive above pivotal support

• Close below 1.2108, 61.8% Aug rise and 1.2103 21 DMA to end topside bias

• Soft close would to target 1.2004 Aug low, then 1.1963 61.8% Jul/Aug bounce

For more click on FXBUZ

• -0.35% amid safe haven flows - AUD/JPY -0.65%, EUR/JPY -0.3%

• Japanese data improved but missed economists expectations nL4N2ZO03Q

• China IP and retail sales data surprised on the downside nL4N2ZO0XF

• Soft Asian data will undermine sentiment offshore - E-mini S&P -0.3%

• Commodities are lower, Brent -0.95%, U.S. copper -1.25%, Dalian iron -1%

• USD/JPY trades within the usually resilient 132.06-135.17 daily cloud

• Cloud base held last week, close below cloud would be first since September

• Close below the 132.06 cloud would be a strong bearish signal

For more click on FXBUZ

• China July retail sales, IP and FAI all worse than expected nB9N2YV01L

• AUD/USD slightly lower - trading around 0.7110 from 0.7120 before data

• Weak China data likely to weigh on key commodities due to demand concerns

• Unexpected PBOC easing earlier likely linked to weak economic activity nB9N2YU01J

• AUD/USD support at 100-day MA at 0.7080 and former resistance at 0.7045/55

• For more click on FXBUZ

• AUD/USD steady around 0.7120 ahead of key China data later today

• China house prices, retail sales and IP are on tap

• Market looking for retail sales to improve to +5.0% Y/Y and +4.6 % for IP

• AUD has been supported of late by a strong rebound in metal prices

• If China data misses expectations, it could negatively impact commodities

• AUD/USD resistance is at the 200-day MA at 0.7150 and 50% retrace at 0.7171

• Support is at the 100-day MA at 0.7080 and former resistance at 0.7045/55

• For more click on FXBUZ

• Steady after closing off 0.6%, despite very strong EZ IP nL8N2ZO214

• No market moving weekend news, so charts the best short term indicator

• Technical dip Friday, as key 1.0369 resistance held after the mid week spike

• 5, 10 & 21 day moving averages rise, neutral daily momentum studies

• 21 day Bollinger bands contract - topside bias remains in place

• 1.0369, 50% of the May-July fall capped - break to target 1.0468 61.8%

• Close below 1.0215 21 DMA, a base in August, would be a bearish signal

• There are no significant close strikes on Monday

For more click on FXBUZ

• EUR/USD steady after falling 0.6% on Friday as USD recovered lost ground nL1N2ZO0DF

• Last week's EUR/USD rally stopped short at key resistance around 1.0370

• The 50% of 1.0786/0.9952 move is at 1.0369 and 55-day MA descends to 1.0355

• Support is at the 10-day MA at 1.0231 - which held on Friday's dip

• More support @ the 21-day MA @ 1.0215 and break would suggest top in place

• EUR/JPY flows out of Tokyo key for EUR/USD direction in Asia

• For more click on FXBUZ

• AUD/USD opens around 0.7120 after rising 0.23% Friday and 3.04% last week

• Rising equities and commodities underpinning AUD strength across the board nL1N2ZO2GQ

• AUD/USD poised below the key 200-day MA at 0.7150, which is key resistance

• More resistance is at the 50% of the April/July move at 0.7171

• AUD/USD trending higher with the 5, 10 & 21-day MAs in a bullish formation

• Supports is at the 100-day MA at 0.7080 and former resistance at 0.7045/55

• AUD will remain supported while investor optimism remains high

• For more click on FXBUZ

The dollar rallied on Friday, extending overnight gains in the NorAm session with the help of forecast-beating University of Michigan sentiment and expectations as well as weekend position pruning following losses in previous sessions.

In late trade, the dollar index was holding just below session highs at 105.64 as dollar sales that occurred in the wake of this week's unexpectedly soft CPI and PPI were unwound.

Traders were shifting focus from expectations that reduced inflation would lead to an earlier and lower peak the fed funds rate to comments from Fed officials indicating continued vigilance over taming price growth until it demonstrates a sustainable move toward the 2% target.

EUR/USD fell 0.52% to 1.0265 as traders repriced the euro for a less-dovish Fed and after its gains earlier in the week were capped by 1.0363, the 50% Fib of 1.0774-0.9952 and the 55-DMA at 1.0365.

Growth concerns for the euro zone owing to rate hikes and rising energy costs remain hindrances for on EUR/USD gains.

USD/JPY rallied 0.4% to 133.48 amid higher U.S. rate expectations, unraveling its midweek dip towards 132 that occurred during the initial reaction to U.S. CPI and PPI.

It was straddling the 10-day moving average at 133.62, and a close above 133.62 would put the 55-DMA at 134.79 and the Aug.
8 high at 135.59 in focus.

GBP/USD fell as sterling bulls cut positions despite a relative GDP beat versus Reuters forecasts, wary that soaring UK inflation and BoE rate hikes will hinder growth.

A close below the daily cloud base at 1.2161 added to sterling’s bearish structure, putting support at the 21-DMA by 1.2091 in focus.

Risk was broadly higher, with the S&P 500 index up 1.1%, while Treasury yields moved higher and BTC and ETH eked out tiny gains.

For more click on FXBUZ

• EUR/USD slid in Europe, NY opened near 1.0290, the slide extended

• Pair fell despite more data indication US inflation moderating nL1N2ZO1AO

• US yields US2YT=RR erased the data induced drop & turned positive

• US$ bought broadly on the back of rates while EUR/JPY fell to 136.91 on EBS

• EUR/USD hit 1.0239 on EBS but buyers emerged ahead of the 10-DMA

• A bounce ensued as the US$ softened, EUR/USD rallied above 1.0265 late

• Techs lean bullish; pair above 10- & 21-DMAs, monthly RSI is rising

• EUR/USD longs need a fresh catalyst nL1N2ZO14Z

• For more click on FXBUZ

MUFG Research maintains a bullish bias on the USD, expressing this view via holding 2 long USD trades in its ToTW portfolio: long USD/CAD targeting 1.3420 and short EUR/USD targeting 0.99.

"The broadly favourable outlook for the US dollar remains in place in our view despite the first signs of weaker inflation evident in the US CPI data released this week. While this data may prove important it will need further corroboration before it can prove meaningful. In the meantime, the Fed will have to persist with hawkish rhetoric given how late the Fed was to commence tightening and given the inflation data this week was just one month. Another jobs and CPI report will be released before the September FOMC and hence we can’t yet rule out another 75bp rate hike," MUFG notes. 

"We expect the 2s10s yield curve to invert further and the extent of yield curve inversion in the past has been an important factor for the performance of the dollar. With risks globally still negative, especially in Europe, it remains most likely that the US dollar will strengthen further," MUFG adds.