Synopsis:

Bank of America sees April’s CPI report as largely benign and consistent with expectations, providing little new justification for a policy pivot by the Federal Reserve. The report suggests tariff-driven inflation is yet to fully surface, and with inflation still above target, rate cuts remain unlikely in the near term unless labor market conditions worsen significantly.

Key Points:

• In-line CPI data: Headline and core CPI both rose 0.2% m/m in April, matching BofA's forecasts. On an unrounded basis, core came in at 0.24%. Y/y headline CPI fell to 2.3%, its lowest since February 2021, while core remained steady at 2.8%.

• Modest core goods inflation: Core goods rose 0.06% m/m. While auto prices declined (-0.18%), items with significant import exposure—such as furnishings, drugs, and IT—saw modest upticks, possibly hinting at early tariff effects.

• Stable core services: Core services rose 0.29% m/m, averaging 0.22% over the last three months. Weakness in airfares and lodging may reflect waning demand for discretionary services.

• PCE impact minimal: BofA expects April core PCE to come in at 0.20% m/m, implying a 2.6% y/y rate. Risks to that estimate come from Thursday’s PPI report, particularly in financial services.

• Fed implications: The report does not shift Fed expectations. BofA maintains that inflation remains too elevated for rate cuts without clear labor market deterioration. Tariff-driven price increases are expected to emerge more clearly in coming months.

Conclusion:

The April CPI report was benign and offered no major surprises. While some signs of tariff effects are emerging, they are not yet material. As a result, the Fed remains in wait-and-see mode, with policy on hold barring significant labor market weakness.

May 13 (Reuters) - The dollar index slid on Tuesday as waning concerns about inflation and optimism about a growth revival following U.S-China trade talks lifted U.S. share prices.

U.S. consumer prices climbed a below-forecast 2.3% in the 12 months through April, the slowest pace in four years. The White House announced it will lower the tariff rate on small packages from China while China said it will lower its tariffs on U.S. goods to 10% for an initial 90 days starting on Wednesday. China also removed a ban on airlines taking delivery of Boeing planes. U.S. President Donald Trump and Saudi Crown Prince Mohammed bin Salman signed a strategic economic partnership agreement, including a $600 billion commitment from Saudi Arabia to invest in the United States. A number of U.S. technology firms announced artificial intelligence deals in the Middle East. Treasury yields firmed as shares rose while a few banks adjusted their Fed forecasts to reflect a more benign economic trajectory. In a social media post, Trump repeated his call for the Federal Reserve to lower interest rates, saying prices for gas, groceries and "practically everything else" are down.

EUR/USD recouped most of Monday's loss as risk tone improved. German investor morale rose more than expected in May. Dutch central bank chief Klaas Knot said the dollar will stay the world's key currency for some time. Despite its bounce, techs remain bearish below a sliding 10-DMA and 1.1200 resistance. The 55-day moving average 1.1030 is within striking distance. GBP/USD firmed toward 1.3302, the 21-day moving average. Cable was boosted earlier by hawkish comments from Bank of England Chief Economist Huw Pill while U.K. data showed Britain's jobs market cooled again last month.

USD/JPY fell below its Ichimoku cloud though the yen remains on its heels against other G10 currencies as risk tone improves and implied volatility sinks.

AUD/JPY rose nearly 1% to it highest level since March.

Treasury yields were up 2 to 6 basis points as the curve steepened. The 2s-10s curve was up about 2 basis points to +46.1bp.

The S&P 500 rose 1.02% fueled by gains in tech and energy shares.

Oil jumped 2.87% on improving demand prospects. Gold rose 0.4% while copper gained 2.12%.

Heading toward the close: EUR/USD +0.88%, USD/JPY -0.62%, GBP/USD +0.96%, AUD/USD +1.68%, DXY -0.78%, EUR/JPY +0.25%, GBP/JPY +0.33%, AUD/JPY +1.03%.(Editing by Burton Frierson Reporting by Robert Fullem)

• USD/JPY holds in narrow 147.65-148.54 EBS range ahead of US CPI

• Trsy yields firm as shares rise after soft CPI, tariff reductions

• Both China and U.S. announced selective reduction in tariff levels

• Pres. Trump secured $600 billion investment commitment from Saudi Arabia

• Oil up 2% as U.S. sanctions companies sending Iranian oil to China

• Yen vols slide across tenors, 3-mo. implied lowest since March

• USD/JPY dips below 147.88-150.40 Ichimoku cloud, tests 21-day upper Bolli

• Yen crosses move broadly higher with AUD/JPY up 1% at a new 2-mo. high

• Resist: 147.88 cloud bottom; 148.65-70 Dec 3 and Mar 31 lows

• Supp: 147.48 21-day Bolli top; 146.60 55-DMA; 146.18 May 8 high

• Tokyo to eye Japan corporate goods prices for April
Yen

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

• NY opened near 1.1105 after 1.1089 traded on EBS in Asia, the rally extended

• US$, US yields fell after April CPI showed slower than expect price increases

• Stocks, gold & other commodities rallied as US$ sank; EUR/USD rallied to 1.11835

• US yields turned higher but EUR/USD remained positive on the session

• USD/CNH drop toward 7.1960 helped EUR/USD trade up +0.81% in NY's afternoon

• Techs lean bearish; pair below 10-DMA & 1.1200 resistance, monthly RSI is falling
eurusd


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

Synopsis:

SocGen advises that major currency pairs like EUR/USD and USD/JPY are likely to consolidate in narrower ranges in the near term, as FX correlations to rate differentials and risk sentiment have weakened. However, they maintain a bearish medium-term USD outlook, encouraging investors to use this pause to hedge against renewed dollar weakness.

Key Points:

• Correlations Breaking Down:

  • USD’s inverse correlation to risk sentiment has weakened or even turned positive.

  • US economic expectations are increasingly detached from hard data, muddying FX signals.

• Short-Term View:

  • EUR/USD and USD/JPY expected to range-trade, pausing after recent volatility.

  • Markets await clarity on whether economic data will align with optimistic expectations.

• Medium-Term Outlook:

  • Further USD weakness is likely later in the year as macro fundamentals reassert themselves.

  • Foreign investment in US assets remains extreme, and gradual outflows are likely to weaken the dollar.

• Tactical Strategy:

  • Use this period of consolidation to hedge against the potential for renewed USD downside.

  • FX markets may enter a calibration phase before resuming trend moves.

Conclusion:

SocGen sees the current phase as a pause in FX markets, especially in EUR/USD and USD/JPY. Investors should not chase moves now but rather prepare for renewed USD weakness, particularly as foreign positioning in US assets begins to normalize.

• $CAD hovers near flat at 1.3975 into Europe close NorAm range 1.4016-1.3974

• Pair reverses early, post-CPI USD rise; Commodities keep rising aids CAD gain

• Oil up 1.84%, copper with a 2% gain, gold up 0.4% despite calmer US econ outlook

• UST yields off early NorAm lows; front-end yields near flat, long-end +3-5bp

• $CAD supt 1.3958 Tuesday low, 1.3900 psychological lvl, 1.3873 rising 10-DMA

• Res 1.4016 Tuesday high, 1.4019 the 200-DMA, 1.4083- 50% of 1.4414-1.3751

CAD Chart:


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

Synopsis:

Morgan Stanley expects flat US retail sales in April, with auto sales declining and restaurant spending rebounding. Industrial production is forecast to rise 0.4% month-over-month, driven by a surge in utility output, while manufacturing shows signs of fatigue.

Key Points:

• Retail Sales:

  • Headline and control group sales: Expected to show no change in April.

  • Auto sales: Forecast to fall by 1.0%M.

  • Restaurant spending: Expected to rebound by 1.0%M.

  • Broader goods categories likely see muted activity.

• Industrial Production:

  • Headline IP: Projected to rise 0.4%M, lifted by increased utility usage.

  • Manufacturing output: Seen falling 0.1%M overall.

  • Non-auto manufacturing: Expected to decline 0.2%M, ending a recovery trend since November.

  • Despite April softness, non-auto factory output is up 1.9%Y, the strongest annual pace since 2022.

Conclusion:

April data may point to cooling momentum in US consumer and manufacturing activity. While utility demand props up overall industrial production, underlying weakness in manufacturing and flat retail sales could raise questions about the strength of Q2 growth.

As tariff-related volatility eases, GBP/USD traders are focusing back to economic data and central banks, with below-forecast monthly U.S. core CPI data on Tuesday giving a slight edge to sterling bulls against a backdrop otherwise characterized by stability in Fed and BoE expectations.

LSEG’s IRPR sees both central banks holding steady in the coming months. STIR futures are pricing a 75% chance of a BoE cut in August and a likely Fed cut in September. By December, markets expect Fed rates at 3.93% and BoE at 3.78%. Sterling rose from a low of 1.3169 in Asia to 1.3247 in early NorAm, gaining momentum during European trading after BoE Chief Economist Huw Pill expressed concern that UK inflation could be more persistent than anticipated, which suggested rates may need to stay high for longer. Pill had opposed last week’s BoE rate cut.

Given the relatively symmetrical paths that markets foresee the BoE and Fed taking, and barring a renewed flare-up in U.S. trade tensions, sterling is likely to remain anchored near current levels, bounded by 1.3079, the 50% Fib of 1.3445-1.2712, and 1.3445, which is the 2025 high put in on April 28.
GBP Chart:


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

Synopsis:

Bank of America has lowered its USD/CAD year-end forecast from 1.40 to 1.38, citing overly optimistic CAD pricing in April. While the pair may consolidate near 1.40 in the near term, BofA sees medium-term downside to 1.35 and recommends a 1-year RKO (reverse knock-out) put to express that view.

Key Points:

• Revised Forecast: USD/CAD is now expected to end 2025 at 1.38 (previously 1.40), with potential to reach 1.35 in the medium term.

• Drivers of CAD Strength: April’s rally was fueled by a BoC rate cut pause, expectations for fiscal expansion, and anticipated investment inflows—factors BofA believes may have driven temporary CAD overvaluation.

• Near-Term Outlook: BofA sees USD/CAD trading sideways around 1.40 over the next two quarters before gradually declining.

• Trade Strategy: A 1-year RKO put is favored to cheaply express a bearish view while taking advantage of current skew pricing.

• Macro Risk: The main risk is a North American recession in 2025, which would trigger renewed USD strength and invalidate the trade.

Conclusion:

BofA remains moderately bearish USD/CAD into 2025, targeting 1.35 medium-term, but sees near-term consolidation. Their preferred expression is a cost-efficient options strategy, allowing participation in a slow USD decline without overexposing to short-term volatility.

• AUD/USD rallied 0.6362-0.64195 overnight, NY opened near 0.6412, was up +0.65%

• Softer US yields & broad based US$ selling underpinned AUD/USD

• Equity drop and gold rally indicated investors avoided US assets

• USD/CNH rally off its 7.1791 low likely helped to prevent further AUD/USD gains

• Daily RSI is rising but pair remains below the 10- & 200-DMAs which may worry longs

• Right shoulder of head & shoulders top forming on daily chart may also worry bulls

• US April CPI is a key data risk in NYH's morning
audusd


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

• Cable nudges up to 1.3219 as BoE's Pill says rates might need to stay high

• 1.3219 is highest level since Monday's four-week low of 1.3140

• Pill wanted BoE to keep rates unchanged last week. Bailey speaks at 1500 GMT

• U.S. CPI data due 1230 GMT: 0.3% MM, 2.4% YY f/c. Core f/c 0.3% MM, 2.8% YY

• GBP/USD might extend north if U.S. CPI data is cooler than expected

• UK police arrest man for arson after fire at PM Starmer's house

GBPUSD

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

• U.S.-China tariff reset has aided EUR/GBP's descent to 0.8400

• The subsequent squeeze in USD shorts has seen EUR, CHF, JPY underperform

• With recent support at 0.8450/75 giving way, this opens the door to 0.8350

• As mentioned previously, upcoming UK-EU summit (May 19) should underpin GBP

• UK PM Starmer's rhetoric is geared towards seeking closer EU ties

• Bias likely to fade rebounds in the cross in lead up to summit

• Resistance = 0.8450/75 (prior support), 0.8490 (200-hour SMA/EMA)
EURGBP hourly chart

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

• EUR/USD is an important psychological swing point

• There's a large amount of option and corporate related hedging tied to 1.10

• Big levels lie ahead 1.10 - 55-DMA 1.1029, 38.2% Jan- April surge is 1.1020

• Low following trade truce was 1.1065 EBS, range next day 1.1089-1.1123

• Any drop below 1.10 would be significant given traders are betting on rise

• Lows ahead 1.10 may encourage more traders to bet on a bigger rally

• Betting dollar drops further is pure speculation

•
EUR/USD

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

Level Technical Significance

1.1378 Daily High May 7

1.1336 Daily High May 8

1.1293 Daily High May 9

1.1242 Daily High May 12

1.1118 ==Update Price==

1.1019 38.2% Fibo 1.0125-1.1572

1.1000 Psychological Level

1.0943 Daily Low Apr 10

1.0880 Daily Low Apr 7

Strategy Sell @ 1.1195

Current Position Flat @ 1.0870

Target: Stop:

Open/Close 03-Apr-25

EUR/USD registered the biggest one-day drop since November 2024, on Monday, highlighting the near-term bearish sentiment. Also note fourteen-day momentum remains negative. The focus is now on the 1.1019 Fibo, a 38.2% retrace of 1.0125 to 1.1572 2025 (EBS) rise, a break and daily close below which would lead to a much deeper drop. We are looking to get short at the 1.1195.

Daily Chart:

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

• Cable holds below 1.3207 (Asia high) after cooler UK ex-bonus pay growth

• Up 5.6% vs 5.7% f/c, boost for doves. 1.3215 is additional resistance level

• 1.3215 was rally high from 1.3140 four-week low Monday (1.3213 = Friday low)

• 1.5 cent drop to 1.3140 prompted by Geneva news: China-U.S. tariffs slashed

• Goldman Sachs now expects Fed to cut rates just once this year, in December

• EU analysing UK-U.S. trade deal. BoE's Pill (hawk) speaks at 0845 GMT

GBPUSD

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

• +0.05% in a fairly busy 1.3169-1.3189 range on FX Matching

• UK shoppers celebrate Easter and the sunshine with a spending splurge

• British pension funds pledge to step up UK investments - should boost growth

• UK employment and US CORE CPI, Fed's favoured inflation data lead event risk

• Charts - 5, 10, & 21-day moving averages crest/fall, momentum studies slip

• Neutral 21-day Bollinger bands - the daily charts have turned net bearish

• 1.3297 21-DMA, then last week's 1.3402 high, are the first resistance levels

• Monday's 1.3140 low, then 1.3077, 0.5% of the April rise are first support
Andy

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

• USD/JPY and the JPY crosses backed away from overnight highs in Asia

• New of a US-China trade tariff truce but most see some tariffs remaining

• Japanese exporters busy into Tokyo fix, forward yen buys across board

• Japan Inc budget assumptions for fiscal year - USD 147+, EUR 157.45

• Safe-haven flows into yen on hold for, higher US yields USD supportive

• USD/JPY 148.54 to 147.76 EBS in Asia after rally to 148.65 overnight

• 147.88-150.40 daily Ichimoku cloud providing upside cushion, resistance

• Spot now back below 148.15 hourly Ichimoku tenkan, above 147.18 kijun

• Option expiries not a factor today, barriers at 150.00, 139-140 now?

• EUR/JPY 164.58 to 164.16 EBS in Asia after rally to 164.91 overnight

• GBP/JPY 195.62 to 194.71 before steadying, follows rally to 195.79 o/n

• AUD/JPY 94.02-64 in Asia, early push down reversed, high yesterday 94.91

• BOJ Apr 30-May 1 minutes show hawk-bias but suggest hold

• BOJ DepGov Uchida sees wages and prices to keep rising

• FinMin Kato wants FX talks with Bessent at G7 ,

• Risk sentiment much better, Nikkei +1.7% @38,266, Asia mostly in black

• Related comment , also , on EUR/JPY
USD/JPY hourly:


EUR/JPY hourly:


AUD/JPY hourly:

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

• AUD/USD remains soft in Asia as unwinding of 'negative USD' trade continues

• U.S. growth fears abating after U.S./CN announce details of tariff pause

• AUD downside wide open, requires emerging global growth story to avoid rout

• India/Pakistan truce soothing Asia markets amid hopes of lasting ceasefire

• U.S. CPI due 1230 GMT Tue; AU employment Thur (Reuters poll +25.0k jobs)

• Range early Asia 0.6362-0.6378, support 0.6180, resistance 0.6550 0.66875
AUD 4hr Trend Channels Chart

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

• Australian gold stocks drop as much as 6.3% to 11,152.2 points, lowest since April 10

• Gold falls as investors moved away from the safe-haven asset following the announcement of a temporary deal between the United States and China to reduce tariffs [GOL/]

• Bellevue Gold and Evolution Mining shed 6.8% and 6.2%, respectively; among top 10 percent losers on the local benchmark

• Northern Star Resources falls 5.7%

• YTD, AXGD gains 32.6%

(Reporting by Nichiket Sunil in Bengaluru)

• Flat after falling 1.1% with the USD up 1.35% on easing US/China tensions

• Monday's close below the 1.3169 0.382% Fibo support leaves a bearish setup

• UK shoppers celebrate Easter and the sunshine with a spending splurge

• UK's Starmer, under pressure from Farage, pledges big drop in immigration

• Charts - 5, 10, & 21-day moving averages crest/fall, momentum studies slip

• Neutral 21-day Bolli bands - daily charts have turned net bearish

• 1.3297 21-DMA, then last week's 1.3402 high, are the first resistance levels

• Monday's 1.3140 low, then 1.3077, 0.5% of the April rise are first support
Andy

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

• Steady after closing down 1.4%, with the U.S. dollar up 1.35%

• Monday's sharp dip confirms recent negative signals - the bias is lower

• ECB should keep a steady hand, hold rates close to current levels - Schnabel

• Investors cheer US-China tariff truce, but are cautious over a final deal

• Charts- 21-day Bollinger bands expand, 5, 10 & 21-day moving averages fall

• Daily momentum studies ease - the recent dip leaves a bearish setup

• 1.1053 0.618% of the Mar/Apr rise, then Apr 7th 1.0880 base first supports

• Yesterday's 1.1242 high, then last week's 1.1380 top are initial resistance

• 1.1145/50 1.511 BLN close strikes for May 13th
Andy

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

• AUD/USD -1.4% overnight after U.S. & CN announced tariff truce details

• Unwinding of 'negative USD' trade accelerating as growth fears abate

• AUD trajectory suffering short-term, breaks base of month-long trend channel

• Fragile India/Pakistan ceasefire remains concerning for Asia markets

• U.S. CPI due Tue, AU employment Thur (poll +25.0k jobs, 4.1% unemployment)

• Overnight range 0.63585-0.6461, support 0.6180, resistance 0.6550 0.66875
AUD 4hr Trend Channel Chart

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

Synopsis:

MUFG expects the US dollar to see only modest gains following signs of tariff de-escalation, citing lingering investor caution, skepticism about US policy stability, and shifting yield dynamics—especially favoring the yen medium-term.

Key Points:

• Tariff Optimism Priced In:
  Positive US comments on de-escalation have boosted the dollar, but FX reaction likely capped, with much of the optimism already reflected in markets.

• JPY Outlook Improving:
  Despite near-term underperformance, the yen is structurally supported by rising JGB yields (30Y at 25-year high near 3%) and reduced incentives to hedge USD exposure.

• Dollar Headwinds Remain:
  Even if tariffs ease, damage to investor confidence and global positioning has already occurred. Any rebound in risk appetite will likely be measured.

• Policy Credibility in Question:
  Given the unpredictability of President Trump’s trade policy approach, investors are likely to remain cautious in interpreting any deal headlines.

Conclusion:

While trade optimism has offered a short-term lift to the USD, MUFG sees the scope for further gains as limited, with investor skepticism, structural yen support, and policy uncertainty capping broader dollar upside.