• Risk-on helped AUD/USD hit an 8-month high of 0.7158 in Asia

• Rally stalled; US$ buyers emerged, USD/CNH rallied near 6.7325

• Iron-ore DCIOc2 slid while equities ESv1 gave back some gains

• AUD/USD fell to 0.71155, NY opened near 0.7125, pair down -0.18%

• Daily techs warn longs; RSI diverged, daily inverted hammer formed

• Monthly techs are bullish; RSI rising, pair above 61.8% Fib 0.7661-0.6170

• US weekly claims, Q4 unit labor costs are data risks during NY hours

• For more click on FXBUZ

• Cable falls to 1.2316 ahead of BoE interest rate decision and quarterly MPR

• See: nL8N34H5C8. 1.2316 = intra-day low. 1.2400 was Asian session high

• Money markets currently see 90% chance of 50 bps BoE rate rise at 1200 GMT

• GBP/USD could fall further if BoE opts for 25 bps hike instead nL1N34H0QA

• 1.2275 (Weds low, before Powell hurt USD) and 1.2250 are supports sub-1.23

• BoE Governor Bailey's press briefing after rate decision/MPR starts 1230 GMT

• EUR/GBP climbs to 0.8920 ahead of ECB and BoE event risks nL8N34H5C8

• 0.8920 is highest level since September 29 (0.8976 was high that day)

• Ascent to 0.8920 fuelled by risk of dovish BoE hike/ultra-hawkish Lagarde

• Money markets currently see 90% chance of 50 bps BoE rate rise at 1200 GMT

• EUR/GBP could rise further if BoE opts for 25 bps instead nL1N34H0QA

• Hike size rests on shoulders of seven of the nine MPC members nL1N3490DE

• EUR/GBP hit 0.8899 in Asia, its highest level since September 29

• Ascent to 0.8899 spurred by EUR/USD gains on Powell outpacing GBP/USD gains

• 0.8875 was pre-Fed high Wednesday, after euro zone core inflation above f/c

• BoE and ECB event risks in pipeline; BoE MPA at 1200 GMT nL8N34H5C8

• EUR/GBP could jump towards 0.90 if BoE opts for conservative 25 bps hike

• Focus will then shift to tone of Lagarde's press briefing from 1345 GMT

• Scope for a drop to 126.56 Fibo, 50% of 101.18-151.94 (2020-2022) EBS rise

• 14-week momentum remains negative, reinforcing the bearish market structure

• Kijun line at 131.00, midpoint of last 26 trading sessions, limits upside

• We are short at 129.90 for 126.80, our stop has been lowered to 131.20

• USD/JPY Trader TGM2336. Previous update nL1N34H0JO

• EUR/JPY range has been 141.31-141.83, on Thursday, so far

• A rebound from a new pullback low, 1.2275, just shy of the 21DMA at 1.2265

• Highs of 1.2405 then stalling in early Thursday trade

• Market still range trading between 1.2264 and 1.2447

• A slight bear bias holding within the daily range but a tight call

• Weeklies highlight a demand on dips scenario: long lower candle shadows

• Weekly cloud base resistance on a closing basis, currently 1.2392

• Will wait for a clearer picture to emerge before setting a new strategy

  For more click on FXBUZ

• EUR/USD maintains firm bias but capped at 1.1034 4th April 2022 high

• Bearish USD bias on dovish take after Powell's comments underpin

• Techs bullish EUR/USD, short dates moving averages continue to point higher

• Markets expect ECB to garner another 50bps hike later

• Focus on ECB president Lagarde's post decision press conference

• Any hint of dovish take to trigger profit taking sales

• Nearby support at 1.0930, 1.0910 10dma, 1.0825 21dma

• RSI and 21day BB near overbought, could post hindrance to EUR gains

• For more click on FXBUZ

  
  

• +0.1% in Asia, trades around the middle of a busy 1.2371-1.2400 range on D3

• Risk on, and the USD under pressure after the FOMC - on soft landing hopes

• BoE set to hike 50pts to 4% - outlook will be pivotal for sterling

• Techs; 5, 10 & 21 day moving averages conflict, 21 day Bolli bands contract

• Neutral momentum studies - no strong bias - uptrend remains stalled

• Sustained 1.2450 Dec/Jan range top break would target 1.2666 May high

• Close below 1.2281 21 DMA, a base this week would be a bearish signal

  For more click on FXBUZ

• AUD/USD gains 0.1% as USD weakens further and risk rallies in Asia

• 25 bps Fed hike taken in stride as bears sense end to tightening cycle

• Hawkish RBA expectations, signs of China economic recovery underpin AUD

• AUD rallies from 0.7131 low to 8-mth 0.7158 peak, eases back on p/taking

• Traders wary of chasing rally after 2.3% rise from Tuesday low of 0.6983

• Caution prevails ahead of BOE & ECB rate decisions tonight, U.S. jobs Fri

• Weekly close above 0.7168, 100-week MA, opens rise to 0.7282, June high

• Resistance 0.7170-75, 0.7200-05, support 0.7095-0.7100, stronger @ 0.7040-50

• For more click on FXBUZ

• Up 0.1% as the USD initially dips, after closing up 1.2% with risk appetite

• Building approvals lead data, poll +1% - interesting, unlikely market moving

• Regional stocks to take the positive Wall Street lead - ASX 200 +0.6%

• Expecting cautious trading ahead of BoE and ECB rate decisions tonight

• Charts; momentum studies base, 21 day Bollinger bands head higher

• 5, 10 & 21 daily and weekly moving averages all climb - bullish setup

• Strong close left a bullish hammer reversal on the daily candlesticks

• This is an unusual strong positive signal - 0.6992 21 DMA is pivotal support

  For more click on FXBUZ

• +0.2% after closing up 0.45% supported by softer USD, but EUR/GBP +0.75%

• UK January PMI suggests a tough year ahead amid mass civil servant strikes

• Bank of England 50pt hike to 4% priced in - outlook will be key for sterling

• Expecting a session of tight range trading into BoE and ECB rate decisions

• Techs; 5, 10 & 21 day moving averages conflict, 21 day Bolli bands contract

• Neutral momentum studies - no strong bias - uptrend remains stalled

• Sustained 1.2450 Dec/Jan range top break would target 1.2666 May high

• Close below 1.2281 21 DMA, a base this week would be a bearish signal

For more click on FXBUZ

• Steady after closing up 1.2%, with the USD and UST yield broadly lower

• 50pt ECB hike to 2.5% fully priced - outlook will be key for the euro

• Euro zone PMI's suggest factories are over the worst - set to recover

• Expecting tight range trading in Asia ahead of the ECB rate decision

• Charts; momentum studies rise, 21 day Bollinger bands head higher

• 5, 10 & 21 day moving averages climb - positive setup has returned

• 1.0938 50% of 2021-2022 fall broken - targets 1.1271 61.8% 2021/2022 fall

• Close below 1.0823 rising 21 DMA, a base this week would end topside bias

For more click on FXBUZ

EUR/USD vaulted higher in volatile trade on Wednesday, overcoming initial ambivalence following the Fed's as-expected 25bp rate hike as bulls took control during Chair Jerome Powell's dovishly interpreted news conference, which could set up further gains ahead.

Powell said more work remained on rate hikes and that inflation is well above the Fed's target but he indicated that past hikes were beginning to have an effect.

Powell said it will take time for the full effect of hikes to be realized, that policymakers were highly attentive to risks inflation poses to both sides of the Fed's mandate and it's not time to be complacent.

However, Powell said that the disinflationary process had started but was at its early stages and that it was good that it had not come at the expense of the labor market nW1N32Z00U.

U.S.
rates EDZ3 and the dollar fell sharply while German-U.S.
tightened to levels not seen since January 2022.

EUR/USD hit a 10-month high and techs highlight upside risks which imply tests of 1.1075/1.1125 and possibly 1.1230/70 are possible.

For more click on FXBUZ

• USD/JPY broke its 8-day range base at 129.02 in broader USD breakdown

• Brief bounce on Fed hike/statement nL1N34G1YU but dives on Powell

• Off earlier on poor US Jan data, though bad weather seen playing a role

• JOLTS jump gave Fed hawks purchase, but rates and yields down on presser

• A sub-129 close would weaken the recent rebound within the downtrend

• Jan's 127.215 trend low is by two 50% Fibos of pandemic rally @127.27/6.56

• Below them is last May's major low at 126.37 on EBS nL1N34H1RD

• Yen demand on expected eventual BoJ normalization persists nL1N34H09D

For more click on FXBUZ

• Sterling slides into NorAm close -0.13% at 1.2293, Wed range 1.2348-1.2282

• Fed hikes 25bp as exp'd, says ongoing increases will be appropriate

• Fed in focus as soft ADP lifts sterling off early NorAm low nL1N34H1FI

• Sterling soft ahead of Thurs BoE meet, +50bp exp'd, BoE seen +25bp in March

• GBP$ supt 1.2285 Tues low, 1.2226 10-WMA, daily cloud top 1.2138

• Resistance 1.2348 Wed high, 1.2369 10-DMA, 1.2448 2023 daily high Jan 23

• EUR/GBP +0.64% at 0.8869, Wed range 0.8875-18; ECB, BoE seen +50bp Thurs

• ECB seen more hawkish in near-term supports EUR strength vs GBP

CIBC Research discusses its reaction to today's FOMC policy statement.

"Nothing to see here folks, as the Fed delivered the highly anticipated quarter point rate hike, and didn’t yet opt to signal a pause or give any solace to markets that are pricing-in rate cuts for the second half of the year. It retained its prior wording that referred to the need for “ongoing increases” in rates ahead, which given the use of the plural term “increases”, implies that they still think there’s more than one hike to come. That could be an effort to push the bond market towards higher yields in the here and now. We expect Powell to emphasize at the press conference that the FOMC is not contemplating an easing in policy this year. But he will have to admit that inflation is retreating faster than the central bankers had anticipated without having yet seen any opening in labour market slack," CIBC adds.

"That fact is one key to our view that there’s only one further 25 bp hike ahead, as the FOMC will be less willing to deliver as much economic pain as it might previously have thought would be necessary should inflation run at the more moderate pace we’ve been seeing in the last 3-6 months," CIBC adds.

• USD/CAD near flat into Europe cls, +0.05% at 1.3314; Wed range 1.3327-1.3289

• Pair hit new 2023 low 1.3289 in early Europe trade, holds just abv 1.33

• Commods soft ahead of Fed exp'd 25bp hike stalls CAD gains

• Fed rate announcement/presser in focus after soft ADP, JOLTS miss higher

• $CAD support at 1.3289 Wed low, 1.3272 lwr 21-d Bolli, 200-DMA at 1.3216

• Resistance 1.3327 Wed high, 1.3361 10-DMA, 1.3471 Jan 31 flash high

Citi discusses its expectations for the USD reaction to today's FOMC policy decision.

"Both Citi Economics and CitiFX Strategy expect a 25bps hike. Citi Economics expect upcoming stronger core inflation to challenge this most recent version of the “transitory” inflation narrative, while CitiFX Strategy expects the Fed to stick to a base case expectation of a peak Fed Funds rate of 5.1%," Citi notes. 

"USD reaction is expected to be similar to the December FOMC, say CitiFX Strategy - upside in US rates and USD that doesn’t stick. They generally find that USD momentum-trades in the late stages of a Fed hiking cycle," Citri adds. 

Sterling rose on Wednesday, extending earlier gains to a brief session high of 1.2345 after ADP employment data hinted that the Fed's 425bp of hikes in 2022 may be stunting employment growth, lifting the pound away from trend lows just below 1.23 and back toward the 10-DMA at 1.2373.

The data may not sway the Fed away from a widely expected 25bp hike later on Wednesday as inflation remains well-above the U.S.
central bank's 2% target, and Chair Jerome Powell is likely to express continued vigilance and a bias for higher rates for longer.

However, the statement and the post-announcement presser will be dissected for hints at possible dissension among Fed members as they try to navigate between inflation fighting and recession avoidance.

The BoE will have its turn on Thursday, and any signs of diminished hawkishness could prompt GBP/USD to resume its slide away from 2023 highs near 1.2450, putting the Jan. 24 low at 1.2264 and daily cloud top at 1.2138 in sharp focus.

For more click on FXBUZ

MUFG Research discusses its expectations for today's FOMC policy decision. MUFG is in-line with consensus in expecting 25bps hike from today's policy decision. 

"There are really only two ways for the FOMC to trigger a clear hawkish reaction by the financial markets – either by hiking by 50bps and suggesting more is still required or by explicitly stating that the Fed intends to hike by more than the just one further 25bp move implied by the OIS market," MUFG notes. 

"The first option is just too aggressive and is very unlikely given the flow of data since the December meeting. The second option is where there is scope. The median dot from only December is that the FOMC expects to hike to 5.125% - 75bps of hikes, one more than currently priced. So if the FOMC wants to be hawkish it will surely focus on this divergence between FOMC thinking and market thinking. A message delivered by Powell that the FOMC remains happy with the December guidance/dots and sees no reason to deviate is what would get most traction in the markets," MUFG adds.

FX traders expecting AUD/USD gains this month can take comfort from seasonal trends.
An analysis of AUD/USD's February performance since 2000 shows it has risen in 16 of the past 23 years, including in 2021 and 2022.

Seasonality should not be considered in isolation, but combined with other factors it can be a useful tool.

AUD/USD's medium-term technical outlook remains very positive.
Last week AUD/USD vaulted and closed above the 0.7091 Fibo, a 61.8% retracement level of the 0.7661 to 0.6170 2022 slump, a very bullish development.

Fourteen-week momentum remains positive, also reinforcing the underlying upside potential for eventual gains to probe the 0.7309 Fibo, a 76.4% retracement of the same 2022 fall.

AUD/USD was buoyed by a risk-on rally on Tuesday when the Fed's preferred wages gauge, the U.S. employment cost index, showed a 1% rise last quarter, its smallest increase in a year.
In times of risk appetite, funds usually flow into of the Australian dollar.

For more click on FXBUZ

Price action in FX options shows a market with strong concerns about the USD/JPY reaction to the BoJ policy decisions in March and April and limited worries about interim volatility or direction.

Traders bought good amounts USD/JPY options expiring after the March and April Bank of Japan meetings since being disappointed by the central bank's failure to tighten policy in January.
These options target increased USD/JPY volatility and potential losses.
Implied volatility is the option markets gauge of actual volatility expectations and its justifiably huge levels seen before January's BoJ meeting could easily be matched at the next.

Three-month expiry implied volatility captured the April 28 BoJ announcement from Tuesday with a big leap in implied volatility flagging the risk from this first meeting under a new governor.
Dealers say that many of those who bought options expiring after the March meeting are now rolling them past the April decision, suggesting a more likely timing for policy adjustment.

However, USD/JPY implied volatility is under broad-based pressure Wednesday as traders sell shorter-dated expiry options like the benchmark 1-month expiry to 12.65 from 13.15.
That price action is consistent with a lack of actual volatility or direction and can help to offset the cost of holding those post BoJ meeting premiums.
Even Wednesday's FOMC policy announcement demands less than half the USD/JPY volatility premium of January's BoJ.

For more click on FXBUZ

• Dollar on edge ahead of Fed decision nL1N34H099

• BOJ's record bond buying highlights challenge for yield control nL1N34H09D

• EBS flow data shows FX traders have been steadily exiting USD/JPY all week

• USD/JPY has seen a 129.80-130.41 range, on Wednesday, according EBS prices

• It looks set to slump while it is under a key level at 131.00 nL1N34H0JO

• EUR/JPY's correlation with USD/JPY high, 30/60-day logs are well above +0.5