• USD G10 net spec long -$4.59bn in Feb 5-11 period; $IDX -0.09%

• Reduced tariff angst and unwinding of Trump trades weigh on USD broadly

• EUR$ -0.08 in period; specs -5.8k contracts now; dovish ECB view weighs

• $JPY -1.19%; specs +35.8k contracts now; narrowing Fed-BoJ spreads boost yen

• GBP$ -0.2%; specs +8.2k contracts now; dovish BoE hold tempers gain

• $CAD -0.32%; specs +9.6k contracts now -151k; tariff delays boost CAD

• AUD$ +0.66% in period; specs +9.7k contracts now -65.6k

• Trump trade/tariff fog clears w/tariff delay; commod-centric CCYs benefit from freer trade view

Majors w/IMM Performance Chart:


IMM Position Table:

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

Feb 14 (Reuters) - The dollar index fell for a fourth day on Friday, sliding as tariff concerns eased while U.S growth worries emerged.

Treasury 10-year yields tumbled to 4.45%, reversing gains since the January payrolls a week ago, after a report that retail sales fell by most in nearly two years. EUR/USD rose as high as 1.0514, fueled partly by optimism about Ukraine peace discussions. Ukrainian President Volodymyr Zelenskiy said he was prepared to talk to President Vladimir Putin once Ukraine had agreed on a common plan with U.S. President Donald Trump and European leaders. Britain's foreign minister David Lammy said that he and U.S. Vice President JD Vance agreed Zelenskiy must be part of any peace talks. Separately, the European Commission said it would react "firmly and immediately" against tariff increases.

USD/CHF fell below its 55-day moving average to a new year-to-date low of 0.8969.

Large 1.05 expiries and a nearby upper Bollinger slowed EUR/USD's ascent before reaching its year-to-date high at 1.0532. Options see upward momentum possibly fading with risk reversals still favoring euro puts. Dollar weakness sent GBP/USD to a new year-to-date high of 1.2631, testing its nearby upper Bollinger. Momentum is currently working in the pound’s favor. A slew of U.K. economic reports will be eyed next week including employment and CPI. British Prime Minister Keir Starmer has discussed visiting the United States on a call with Donald Trump. USD/JPY was pressured by falling Treasury yields though downward momentum stalled before it reached the key 152 level where options are stationed. Volatilities and skews fell across tenors suggesting the pair, while remaining in a bearish trend, may not move far from its 200-DMA at 152.74. Resistance is seen at its 100-DMA at 153.35 and 21-DMA of 154.16.

Treasury yields were down 3 to 6 basis points. The 2s-10s curve was down less than 1 basis point at +22.0bp.

The S&P 500 rose 0.10% as yields eased. WTI oil fell 0.70% on expectations that a Ukraine peace deal would unleash global supply.

Gold fell 1.56% in a round of profit-taking while copper was little changed. Heading toward the close: EUR/USD +0.35%, USD/JPY -0.30%, GBP/USD +0.23%, AUD/USD +0.65%, =USD -0.36%, EUR/JPY +0.04%, GBP/JPY -0.06%, AUD/JPY +0.33%.(Editing by Burton Frierson Reporting by Robert Fullem)

Synopsis:

MUFG remains unconvinced that the recent USD sell-off will persist, as uncertainty around trade policies and potentially disruptive reciprocal tariff hikes should continue to support the dollar. While a deeper correction in USD could occur, it would likely present a buying opportunity into Q2 as tariff plans are finalized.

Key Points:

1. Trade Policy Uncertainty Remains USD-Supportive:

   • The final methodology for “reciprocal tariffs” will be key in assessing their impact on global trade.
   • The inclusion of non-tariff factors could make these measures more disruptive, adding to market uncertainty.

2. USD Weakness May Be Limited in the Near-Term:

   • Uncertainty alone should keep the dollar supported, reducing the likelihood of a sustained downtrend.
   • Until more clarity on tariffs emerges, the USD correction could remain shallow.

3. Potential for USD Buying Opportunity into Q2:

   • If USD weakens further, it may present an attractive entry point for long positions.
   • Finalized tariff details could reignite USD strength, particularly if they disrupt global growth and drive risk aversion.

Conclusion:

MUFG does not see a clear path for sustained USD weakness given ongoing trade policy uncertainty. While a deeper correction could occur, it may set up a buying opportunity into Q2 as reciprocal tariff plans become clearer.

• $CAD off Fri low into Europe cls, -0.13% at 1.4175; Europe range 1.4190-51

• CAD short unwind continues amid lower UST yields, softer trade outlook

• Commodities off early highs, oil flat, copper -2.52% saps CAD strength

• Net spec CAD short was -160k contracts as of Feb 4, $CAD -0.6% since Feb 4

• $CAD supt 1.4151 Friday low, 1.4141 daily cloud base, 1.4111 100-DMA

• Res 1.4201 Friday high, 1.4242 falling 55-HMA, 1.4294 the 10-DMA

CAD Chart:

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

Synopsis:

ANZ warns that recent EUR/USD gains driven by optimism over Trump-Putin talks on Ukraine may fade quickly if negotiations stall. Additionally, weak euro area data and ECB easing risks continue to weigh on EUR fundamentals, making extended EUR rallies an opportunity to short EUR/USD.

Key Points:

1. Trump-Putin Talks Drive Temporary EUR Gains:

   • Market optimism over a potential Russia-Ukraine resolution has supported EUR.
   • However, the success of these talks remains uncertain, and if they stall, EUR gains could reverse quickly.

2. Weak Eurozone Data Reinforces Bearish Outlook:

   • December Industrial Production fell -1.1% m/m—the largest drop since September 2020, signaling continued economic weakness.
   • Germany’s January Harmonized CPI met expectations, showing stability but not enough strength to fuel sustained EUR upside.

3. ECB Easing Still a Risk:

   • The ECB may need to ease further as eurozone growth continues to stagnate.
   • Rate cut expectations could cap EUR gains, keeping EUR/USD vulnerable to downside.

Conclusion:

While EUR/USD has rallied on geopolitical optimism, ANZ remains cautious on its sustainability. Given weak euro area data and ECB easing risks, extended EUR rallies may present an opportunity to short EUR/USD—particularly if talks between Trump and Putin fail to progress.

• Cable climbs to 1.2631 as U.S. retail sales miss continues to weigh on USD

• 1.2631 is highest level since Dec 19 (1.2665 was high that day)

• UST yields fall further, after tumbling on Thursday (which weighed on USD)

• 1.2600 (former resistance level) is now a GBP/USD support point, pre-1.2575

• British PM Starmer plans U.S. visit with tariffs and defence in focus

• U.S. looking at currency manipulation in tariff debate, Treasury chief says

GBPUSD

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

Synopsis:

BofA sees technical similarities between the 2015-2017 and 2023-2025 USD cycles, with DXY forming a potential Q1 top. If history repeats, DXY may decline after peaking in early 2025, similar to its mid-2017 drop.

Key Points:

1. Historical Comparison – 2016 vs. 2024 Elections:

   • 2016: Post-election, DXY rallied 6.42%, breaking out of a two-year range, but peaked in Q1 2017 at 103.82 before a sustained decline.
   • 2024: DXY has rallied 6.32%, again breaking out of a two-year range, with a measured target of ~114, but has only reached the low 110s so far.

2. Potential Q1 2025 Top Forming:

   • If no higher high occurs in Q1 2025, DXY could be forming a similar topping pattern as seen in Q1 2017.
   • This setup suggests a potential reversal lower later in 2025.

3. Measured Move Target Still Valid:

   • While the 2016-17 rally only reached half of its target before rolling over, the 2024-25 pattern also shows DXY reaching just half of its projected 114.
   • Further upside is possible, but failure to break higher soon would increase the risk of a mid-year peak.

Conclusion:

DXY appears to be mirroring its 2016-2017 pattern, suggesting that if no higher highs occur in Q1 2025, the index may top out and reverse lower—just as it did in mid-2017. However, the measured move target of 114 remains intact, meaning further upside cannot yet be ruled out.

Synopsis:

January US retail sales disappointed, falling 0.9% (vs. -0.2% expected), while the control group dropped 0.8% (vs. +0.3% expected). However, strong prior months and a resilient labor market suggest this is likely a temporary slowdown, rather than a shift in consumer behavior.

Key Points:

1. Broad-Based Decline in Sales:

   • Headline retail sales: -0.9% (vs. -0.2% expected).
   • Control group: -0.8% (vs. +0.3% expected).
   • Notable weakness in key discretionary categories, including online sales (-1.9% m/m).

2. December Revisions Partially Offset Weakness:

   • Upward revisions to December data softened the negative impact.

3. Longer-Term Consumer Strength Remains Intact:

   • Control group sales still 3.7% higher y/y, indicating robust consumer spending trends.
   • Labor market remains healthy, supporting future spending.

Conclusion:

Despite a sharp January pullback, CIBC sees no major warning signs for the US consumer. The labor market remains strong, and past spending momentum is intact, making this a likely temporary pause rather than a trend shift.

• EUR/USD 20-DMA crossing over 55-DMA - bullish Golden Cross

• Signal occurring when rally becoming stretched

• Friday's range 1.0448-1.0487

• Top of 20-day Bollinger Bands is 1.0502

• Target for minor correction current downtrend is 1.0551

• Traders have forgotten that the trend is their friend

•
EURUSD

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

• GBP/USD is knocking on the door of key resistance

• A 38.2% Fibo is at 1.2610 and a daily Ichimoku cloud top at 1.2620

• Thursday's close above the 1.2550 Feb. 5 high could prove significant

• Daily RSI is nearing over bought levels and positive momentum is fading

• Weekly action also eying a cloud base, 1.2634

• Mixed signals leave us side lined for now

• Bullish risk the theme

• GBP/USD trader GBP/USD Trader: [page:2338]
GBP/USD daily candle chart:

(Peter Stoneham is a Reuters market analyst. The views expressed are his own.)

• Recent FX option trades have seen demand for 1.0450-1.0650 strikes

• However, there hasn't been much interest to trade any strikes above, yet

• Directional strikes will often show perceived extent of FX gains

• It's also worth noting EUR/USD option implied volatility levels

• They have fallen sharply toward 2025 lows over recent sessions

• Price action is consistent with risk apetite/less FX realised volatility

• Risk reversal options have further reduce downside vs upside strike premiums

• Huge strikes expire between 1.0445-1.0525 Fri - 1.0500 is the largest
EUR/USD risk reversals


EUR/USD FXO implied volatility


EUR/USD FX option strikes expiring between Feb. 14-21

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

• Last week USD/JPY closed under the 151.51 Fibo, but subsequently recovered

• 151.51 Fibo is 38.2% retrace of the 148.65 to 158.88 (Sept to Jan) EBS rise

• A bear-trap, set when a mkt breaks below a tech level but quickly reverses

• We would recommend standing aside for now, await clearer signals

• USD/JPY Trader . Previous update

Weekly Chart:

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

• EUR/USD recovery attempts will likely run out of steam

• Fourteen-week momentum remains negative, scope for a bearish resumption

• Only a break and weekly close above the the 1.0541 Fibo would defer

• 1.0541 Fibo, 38.2% of the 1.1214 to 1.0125 (September to February) EBS drop

• We are short at 1.0400 for eventual losses to our 1.0150 target

• EUR/USD Trader . Previous update

Weekly Chart:

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

• Cable eyes 1.2575 (Jan 7 high) after extending north from 1.2454

• 1.2454 was low after US PPI data: details suggest core PCE likely easing

• Gains aided by Trump stopping stop of imposing new tariffs on Thursday

• Offers may emerge near 1.26 if 1.2575 vaulted (1.2600 expiry next Tuesday)

• 1.2550 and 1.2515 are support points. 1.2550 was high last week (Feb 5)

• 1.2515 was post-UK GDP high. US retail sales due 1330 GMT; minus 0.1% MM f/c

GBPUSD

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

• Pull of the February 17 cloud twist deals our long play a blow

• EUR/GBP slips back below its daily cloud

• Tight early price action limiting the damage so far

• Negative momentum is fading and RSI continues to flat line

• From Monday the cloud begins to rise, which could drag on further weakness

• Positive close on the week, added to last week's doji could help our cause

• EUR/GBP Trader EUR/GBP Trader: [page:2343]
EUR/GBP daily candle chart:

(Peter Stoneham is a Reuters market analyst. The views expressed are his own.)

• Trades down just 0.05% in a 1.0454-1.0469 range in a low key Asian session

• President Trump promises Kyiv involvement in peace talks with Russia

• Trump unveils roadmap for reciprocal tariffs on US allies, competitors

• Markets are hoping Sunday's German election provides a viable government

• Charts - rising 5, 10 & 21 DMAs as 21-day Bollinger bands climb

• Positive daily momentum studies - daily signals have turned positive

• Thursday's 1.0374 low and then the Feb 4 1.0272 base are initial support

• 1.0507 upper 21-day Bolli and Jan 27th 2025 1.0534 top initial resistance

• 1.0450 1.404 BLN and 1.0475 1.783 BLN close strikes for Feb 14th
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

Synopsis:

Goldman Sachs expects the Fed to cut rates twice in 2025 (June & December) and once more in June 2026, while the ECB will continue sequential 25bp cuts until July 2025, reaching 1.75%. However, if growth weakens further, the ECB could cut more aggressively.

Key Points:

1. Fed Outlook: Gradual & Limited Rate Cuts

   • Two 25bp cuts in 2025 (June & December), followed by one more in June 2026.
   • Terminal rate: 3.5-3.75% (no aggressive easing expected).
   • Additional cuts in 2025 are a close call, depending on inflation trends and labor market conditions.

2. ECB Outlook: Sequential Cuts with Flexibility for Faster Easing

   • 25bp cuts at each meeting until July 2025, bringing the rate to 1.75%.
   • If Eurozone growth deteriorates, ECB could cut faster and deeper than currently projected.

Conclusion:

Goldman Sachs expects a cautious Fed, keeping rates elevated longer, while the ECB is on a clearer path to continued easing. The relative policy divergence supports USD strength over EUR in the near term, but a weaker US economy in H2 could shift dynamics.

• Off 0.05% in a tight 1.2558-1.2572 range with steady interest on FX Matching

• The UK energy regulator plans faster grid tie-ups for new projects

• China is ready to continue improving ties and deepen cooperation with UK

• There is no significant UK data or scheduled BoE speeches today - USD leads

• Charts- 5, 10 & 21-day moving averages climb, as 21-day Bolli bands rise

• Positive daily momentum studies - daily signals have turned bullish

• The 1.2596 upper 21-day Bolli band and the 1.2616 2025 top likely resilient

• Thursday's 1.2442 low, then Tuesday's 1.2332 base are initial support

• A close above the 1.2616 2025 high would be a strong positive for next week
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• AUD/JPY like other JPY crosses recently rallied but upside was limited

• High Wednesday 97.32, yesterday 97.27, off since to 96.29-69 range today

• Downtrend in place since 102.40 on November 7 2024

• Resistance noted above descending 55-DMA Wednesday-Thursday, at 97.16 today

• Daily Ichimoku cloud 97.67-98.94 above

• Spot currently in 96.18-84 hourly Ichimoku cloud, cloud to taper

• Ascending 55-HMA in area at 96.58, 100/200-HMAs below cloud at 96.05/95.87

• RBA rate cut expectations building, short series beginning next week?

• Contrasts with BOJ continuing hawkish stance, possible March hike

• On the options front, A$452 mln expiries today between 96.55-65

• Related previous comment , also

• Latest RBA poll , for more click on [FXBUZ]

AUD/JPY daily:


AUD/JPY hourly:


Cuts ahead for RBA, BoC and SNB:

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

• AUD/USD continues recent strength, hovering near the Jan 24 high

• Reuters poll showed 90% of economists expect RBA to cut 25bps Tue

• Respondents anticipate start of small easing cycle - 1st since 2020

• But unbothered by expectations, AUD shows signs of breaking higher

• Recent higher lows and higher highs indicate strong underlying demand

• Holding above 55-DMA, pushing topside Bollinger Band repeatedly

• Range in Asia 0.63109-204, support 0.6230, resistance 0.6330
AUD mid

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

• Off 0.05% after closing +1% with stronger GDP, and the U.S. dollar off 0.8%

• Bank of England policymakers Greene and Pill cautious on rate cuts

• No significant UK data or scheduled BoE speeches today - USD likely leads

• Charts- 5, 10 & 21-day moving averages climb, as 21-day Bolli bands rise

• Positive daily momentum studies - daily signals have turned bullish

• The 1.2597 upper 21-day Bolli band and the 1.2616 2025 top likely resilient

• Thursday's 1.2442 low, then Tuesday's 1.2332 base are initial support

• Close below the tested 1.2422 21-day moving average ends the topside bias

• A close above the 1.2616 2025 high would be a strong positive for next week
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• Flat after closing up 0.8%, with the USD off 0.8% and lower Treasury yields

• Trump promises Kyiv will be involved in peace talks with Russia

• Euro zone industrial production shrank faster than expected in December

• Germany faces a year of industrial strife - hard to be a EUR/USD optimist

• Charts - rising 5, 10 & 21 DMAs as 21-day Bollinger bands climb

• Positive daily momentum studies - daily signals have turned positive

• Yesterday's 1.0374 low and then the Feb 4 1.0272 base are initial support

• 1.0508 upper 21-day Bolli and Jan 27th 2025 1.0534 top initial resistance

• 1.0450 1.404BLN and 1.0475 1.783BLN close strikes for Feb 14th
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

Synopsis:

EUR/CHF has risen toward the upper end of its 0.93-0.95 range as resilient risk appetite and rebounding DM rates have worsened CHF’s rate disadvantage. Credit Agricole expects EUR/CHF to rise towards 0.97 later in 2025 as the Swiss National Bank (SNB) moves toward a zero-interest-rate policy (ZIRP) amid ultra-low inflation.

Key Points:

1. CHF Rate Disadvantage Deepens

   • CHF is under pressure as developed market (DM) rates rebound, exacerbating the negative rate differential.
   • The SNB is expected to maintain near-zero rates this year, reinforcing CHF's role as a funding currency.

2. EUR/CHF Outlook

   • High CHF valuations and contained volatility make it an attractive funding currency.
   • EUR/CHF is expected to rise towards 0.97 later this year, assuming global uncertainties fade and rate differentials widen.

Conclusion:

Credit Agricole sees further CHF weakness ahead, as ZIRP policies, low inflation, and a widening rate differential make it an ideal funding currency. If global risk sentiment remains steady, EUR/CHF should climb toward 0.97 later in 2025.

(Adds chart)

• USD/JPY slides with Trsy yields after PPI report backs Fed cuts

• Broadly weaker USD, lower oil also on optimism about Ukraine also weighs

• Trump outlined reciprocal tariff plan in memorandum

• Added Ukraine would have a seat in peace process, trusts Putins intent

• Pair eyes 152.74 200-DMA after sliding below 153.25 100-DMA

• Resist: 153.60 cloud base, 154.40 21-DMA and 153.82 55-DMA
yen

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