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By Randolph Donney  —  Sep 23 - 02:35 PM
  • Major rebound from Wed's bounce off Sep, mid-Aug 109.11-12 lows post-Fed

  • Haven yen sold far and wide on rebounding stocks, USD/JPY shorts squeezed

  • Japanese holiday may have left market bereft of natural rally sellers

  • Last week's highs and the daily cloud top at 110.16/19 on EBS breached

  • Next hurdles are Sept's 110.45 high and big 110.50 expiries nL1N2QP1GI

  • Ebbing Evergrande risk, Fed tightening vs BOJ stasis view are main props

  • Top of 12-week consolidation range is at 110.80

For more click on FXBUZ

Chart Click here

Chart Click here

Refinitiv IFR Research/Market Commentary
By Paul Spirgel  —  Sep 23 - 01:37 PM
  • GBP/USD ends NY +0.87% at 1.3740, near day's high; Thurs range 1.3950-1.3615

  • BoE holds rate, Ramsden joins Saunders voting to reduce APP aids GBP lift

  • Sterling holds rally, near 1.3750, after hawkish BoE taper vote nL1N2QP1C0

  • UK rate futs price early BoE hike, Evergrande tumult ebbs, lifts risk

  • Pair off low by 1.3600 eyes daily cloud base at 1.3773, 100DMA 1.3903

  • EUR/GBP -0.42% at 0.8548, Thurs range 0.8590-37; hawkish BoE tones trump steady ECB view

GBP Chart: Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Sep 23 - 01:30 PM

Credit Agricole CIB Research discusses USD/JPY outlook and maintains a bullish bias and a long exposure in spot targeting a move towards 115.

"While Japan’s yield curve remains locked down by the BoJ’s YCC, US short-term rates have headed higher with the Fed’s dot plots pointing to the Committee being split down the middle on whether or not to begin hiking rates by mid-2022. FOMC Chair, Jerome Powell, also said that tapering could begin as soon as November," CACIB notes. 

"But, the gentle pace at which the FOMC is expected to lift rates has led to a flattening in the UST curve narrowing the US-Japan box yield spread. This narrowing is holding USD/JPY back. Indeed, the exchange rate remains locked in a broad 109.00-110.50 range. We continue to think that higher UST long-end yields will prevail and push USD/JPY higher. We remain long USD/JPY as a trade recommendation," CACIB adds. 

Crédit Agricole Research/Market Commentary
By Christopher Romano  —  Sep 23 - 10:19 AM

A day after Federal Reserve policymakers and Fed Chair Jerome Powell alerted investors that bond buying tapering is coming soon nL1N2QN1LU risk sentiment remained upbeat, leaving AUD/USD shorts facing the risk of a massive squeeze.

AUD/USD traded below Wednesday's 0.72245 low in Asia trading but sales of the safe-haven dollar and yen along with equity and commodity rallies helped the aussie rally away from key support near 0.7220 and above the 10-day moving average and daily cloud base.

The price action should concern AUD/USD shorts as the latest CFTC report showed net-short AUD positions at record levels.
AUD/USD shorts should be concerned that the pair is rallying despite investors pulling forward expectations for the Fed's first rate hike EDU2 and the U.S. 10-year yield US10YT=RR is bumping up against the 200-DMA.

Should risk sentiment remain buoyant, AUD/USD's rally is likely to extend, which could force AUD shorts to cover positions.

Daily technicals highlight upside risks.
Daily RSI is rising after diverging on Thursday's low and a bullish engulfing candle is in place.

Significant resistance sits in the 0.7330/50 region.
A break above that zone is likely to trigger stop-loss buying.
A test of September's monthly high is then likely.
Should that high break the 200-DMA and July monthly high are targeted.

For more click on FXBUZ

audusd Click here

audcft Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Sep 23 - 10:45 AM

ING Research discusses the USD outlook in light of yesterday's FOMC September policy decision.

"We are a little surprised that the dollar has not pushed further ahead overnight, although this could be down to two factors. The first is that investors do not seem to agree with the Dot Plots that foresee the policy rate being taken to a median of 1.8% in 2024. We were looking at the 1m OIS priced three years' forward last night and after initially rising 4-5bps on the hawkish Dot  Plots, it has since slumped to be lower day-on-day," ING notes.

The second factor taking the steam out of the dollar rally may be some progress on the Evergrande story, where a press release said that a CNY bond had been restructured - prompting a 5 cent rally in its USD bond. On balance we suspect the dollar remains bid on dips against low-yielding Europe in particular," ING adds. 


ING Research/Market Commentary
By Paul Spirgel  —  Sep 23 - 10:16 AM

Sterling maintained European session gains and was last up 0.87% at 1.3740 on Thursday after a hawkish BoE rate hold, which included Deputy Governor Dave Ramsden joining Michael Saunders in voting for reducing the gilt purchase target.

Though the BoE remained concerned about the outlook for the labor market and inflation, members agreed some of this uncertainty should be resolved in coming months nS8N2OX0A3.

UK short-sterling futures fell, pricing in a BoE hike in February 2022, 0#FSS: and more than two full 25bp increases by Dec 2022.

With the BoE matching the Fed's determination to embark on normalization, the pound was able to recoup some recent losses.
However, U.S. Eurodollar futures hint that once the Fed begins its own rate hikes, now priced in Q4 2022, the Fed will hike at a faster rate than the BoE, which may cap GBP/USD strength.

Rising global inflation and doubts creeping into the "transitory" narrative has shifted markets' focus squarely to employment and the trajectory of COVID cases as the pandemic recovery progresses.

GBP/USD's rally off trend lows near 1.3600 eyes a cluster of daily moving averages and daily cloud base resistance in the mid-1.37s, above which the daily cloud top by 1.3881 and 100-DMA by 1.3902 cap.

For more click on FXBUZ

GBP Chart: Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Sep 23 - 09:31 AM

Bank of America Global Research notes that option flow has turned bearish on CAD and bullish on SEK.

"Among G10 currencies, cumulative put/call ratio is currently lowest for NOK and NZD, and highest for CAD and CHF. This means option investors have seen the most favorable upside for NOK and NZD, and have been holding bearish views for CAD and CHF. Understandably so, the Norges Bank and the RBNZ are the most hawkish among G10 central banks and stand ready to raise the policy rate," BofA notes.

"Among the so-called “high-betas”, open interest now favors USD upside against CAD and AUD for the rest of the year. On the other hand, unexpired open interest is bullish for NZD, as investors expect rate-hike decision in the upcoming October RBNZ meeting," BofA adds. 

BofA Global Research
By eFXdata  —  Sep 23 - 08:30 AM

TD Research likes fading the USD rallies and buying EUR/USD dips into 1.17.

"The Fed meeting was undoubtedly hawkish, leaving us to pull our taper call forward by a month to November from December. That said, the USD's moment in the spotlight was fleeting, reflecting points we have discussed before. The main argument for our USD fade call is that tapering is only part of the normalization process," TD notes.

"The risk-on tone in light of the hawkish Fed implies the market is calling a Fed bluff on the dot plot outlook. What's more, our market positioning and valuation models had the USD front-running the Fed, limiting its follow-through. In turn, the Fed has done little to distract us from our fall USD playbook that calls for fading rallies in light of modest reflation revival. We like buying EURUSD dips towards 1.17, while CADJPY topside flows well with these themes and among the cheap G10 crosses," TD adds. 

TD Bank Research/Market Commentary
By Rob Howard  —  Sep 23 - 06:38 AM
  • AUD/USD retreats to 0.7262 as report on Evergrande hurts risk-sensitive AUD

  • China asking local govts to prepare for potential downfall of Evergrande-WSJ

  • See: nFWN2QP0GW. AUD is often used as a proxy for China risk

  • 0.7290 was European am high, as rise in risk appetite lifted the AUD

  • See: nL1N2QP0HT. 0.7290 = six pips shy of Wednesday's high

  • Net AUD short held by IMM specs recently hit all-time high nL1N2QN0HI

AUDUSD Click here

Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Sep 23 - 05:56 AM

Currency traders are usually guided by the profitability of their bets and if that is the case EUR/USD may head higher before dropping.

Since June traders have successfully staked a lot of money on EUR/USD dropping with the pair falling from 1.1909 to 1.1685 since jobs data was released on Sept 3 and the Federal Reserve outlined policy yesterday.

They have profits to book and cause to do so because EUR/USD did not break to a new 2021 low and option vols have dropped since, lessening the probability of that happening. nL1N2QP0GG

Should profit taking take hold EUR/USD is likely to return to neutral ground that's represented by the centre of the 20-day Bollinger bands at 1.1797 and the gravitational pull of a daily Ichimoku twist at 1.1804.

The net EUR/USD bet remains long, however, and having narrowly avoided a stop chase below 1.1664, traders may be inclined to pare these bets, weighing on any recovery and potentially pushing EUR/USD into a lower range towards 1.15-18. nL1N2QO0FW

For more click on FXBUZ

EURUSD Click here

Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Sep 23 - 04:44 AM
  • FX traders have been selling USD/JPY all week, according to EBS flow data

  • As spot has been rising since Wed, sales are evidence of profit-taking

  • USD/JPY has seen a 109.78-109.99 range on Thursday, according to EBS prices

  • Daily cloud, that spans 109.86-110.19 region, will likely cap recovery moves

  • USD/JPY, EUR/JPY 30/60-day log correlations are both above +0.50

  • Meaning the two FX pairs perform daily closes in the same direction a lot

EBS Flow Data Chart: Click here

Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Sep 23 - 03:52 AM
  • Big miss for German PMIs pushes EUR/USD down slightly

  • Sep services 56.0 vs 60.2 f/c, manufacturing 58.5 vs 61.5 f/c

  • Bad news has tendency to support risk taking as it supports stimulus

  • ECB cannot dial back stimulus easily if economy struggles

  • EUR/USD 1.1714-05 EBS on data after 1.1724 EBS high shortly ahead data

  • Range 1.1684-24, EUR/USD struggling to stretch boundaries nL1N2QP0A5

  • Quiet FX markets growing quieter, EUR may suffer as a result nL1N2QP0BZ

EURUSD Click here

Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Sep 23 - 02:47 AM
  • Cable hits 1.3653 after pushing its recovery envelope from 1.3610

  • 1.3610 was Wednesday's one-month low, during Powell's news conference

  • Powell spoke relatively hawkishly about Fed's taper timeline nL1N2QN1LU

  • Offers expected pre-1.37 if GBP/USD extends north (1.3688 = Tuesday's high)

  • UK Sept flash PMIs at 0830GMT may impact GBP ahead of BoE MPA at 1100GMT

  • See: nL8N2QO25O. UK service PMI f/c 55.0; manufacturing PMI f/c 59.0

GBPUSD Click here

Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Sep 23 - 02:33 AM
  • EUR/USD failed above top 20-day Bollinger bands on NFP day (Sep 3)

  • EUR/USD currently struggling to hold below same bands

  • Seems some of many traders who are short are opting to take profits

  • EUR/USD range 1.1684-1.1715 EBS after 1.1685-1.1756 yesterday

  • Time will allow for bands to drop and deeper losses

  • Profit taking might lift EUR/USD a little higher first

  • Daily cloud twist at 1.1803-04 on Oct 12 may attract

  • Centre of Bollinger bands at 1.1797 is close to the cloud twist

EURUSD Click here

Refinitiv IFR Research/Market Commentary
By Ewen Chew  —  Sep 23 - 01:53 AM
  • AUD/USD bulls are conflicted as China stocks rebound second day

  • Rally may halt at chart resistance near 0.7267-0.7290

  • Ceiling of Bollinger downtrend channel, Ichimoku Cloud to cap

  • China Evergrande chairman reassures retail investors nL1N2QP048

  • Potential for further monetary policy easing in China nL1N2QP03Z

  • Weighing against return of risk-on is FOMC's hawkish turn nL1N2QO2UY

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Sep 22 - 11:47 PM
  • EUR/USD opened 0.32% lower at 1.1687 after FOMC deemed hawkish

  • It traded 1.1683 before attaining a bid tone on small EUR/JPY demand

  • Large option expiries around 1.1700 helped to draw the price action

  • Heading into the afternoon the EUR/USD is at session high around 1.1700

  • Technicals lean bearish after EUR/USD completed a bearish outside day

  • The 5, 10 and 21-day MAs are aligned in a bearish formation and tilt lower

  • Resistance is at the 10-day MA at 1.1758 and break would ease pressure

  • Support and objective of move lower is the 2021 low at 1.1664

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Sep 22 - 11:16 PM
  • AUD/USD opened 0.12% higher at 0.7241 as risk rally trumped hawkish Fed nL1N2QO28G

  • After trading 0.7244 - the AUD/USD came under gentle pressure in Asia

  • It traded to 0.7223 and heading into the afternoon it is 0.7225/30

  • The 0.7220/25 level has held the past 4 days as bids tipped at 0.7220

  • A break below 0.7220 targets the 76.4 of the 0.7106/0.7477 move at 0.7194

  • AUD/USD likely to remain vulnerable after Evergrande relief rally runs its course

  • Divergent central bank expectations between RBA and Fed should limit upside

  • Resistance is at 10-day MA at 0.7289 and break would ease downward pressure

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Sep 22 - 09:12 PM

Sterling is poised above critical 1.3600 support heading into Thursday's Bank of England policy meeting, with the U.S. dollar looking strong and GBP charts negative.

The positive market response to a more hawkish Federal Reserve nL1N2QN1LU saw the U.S. dollar firm with stocks and commodities on Wednesday. GBP/USD closed 0.3% lower, just above major supports around 1.3600, ahead of the BoE rate decision.

The BoE is expected to leave policy settings on hold, as the COVID furlough scheme expires at the end of September, clouding the outlook for employment and the economy nL8N2QO4FN.

Inflationary pressures are building as a surge in natural gas prices impacts the food industry nL8N2QO10E.
The focus will be on the BoE's assessment of whether the pressures are temporary or more structural nL8N2QO25O.

The USD is strong, benefiting from safe-haven flows when markets are spooked and general demand when markets are optimistic or Treasury yields firm.
The major upcoming issue for the dollar is the U.S. debt ceiling, which is expected to be voted on next week nL1N2QO1JR. A debt default, which looks unlikely, would hit the USD.

GBP/USD has support at 1.3600, a weekly base three times since August, with a double weekly bottom from February and July at 1.3566/72.
Technically a sustained break of 1.3550 would open the door to 1.3166, 38.2% of the 2020-2021 rise.

For more click on FXBUZ

gbp Sep 23 Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Sep 22 - 08:44 PM
  • AUD/USD approaching support at 0.7225 as USD firms across the board

  • FOMC event was more hawkish than most expected as dot-plot moves towards 2022 Fed hike nL1N2QN1LU

  • A break below 0.7220 targets the 76.4 fibo of 0.7106/0.7477 move at 0.7194

  • Positive reaction in risk markets to Fed helping to underpin AUD/USD for now

  • Resistance is at the 10-day MA at 0.7290 and break shifts pressure to upside

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Sep 22 - 06:48 PM
  • EUR/USD completed a bearish outside day after whippy reaction to FOMC nL1N2QO28G

  • It ended the day 0.32% lower and below previous buying support at 1.1700

  • The next level of support is found at the 2021 low at 1.1664

  • EUR/USD trending lower with the 5, 10 & 21-day MAs in a bearish alignment

  • Only a break above the 10-day MA at 1.1756 would ease downward pressure

  • EUR/USD to remain pressured while Fed expectations remain hawkish

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Sep 22 - 06:18 PM
  • AUD/USD opens 0.12% higher after AUD outperformed most major currencies

  • Receding fears that Evergrande will default supported risk currencies nL1N2QO1IT

  • Commodity and equity rally sent AUD/JPY 0.65% higher nL1N2QO0MWnL1N2QO2XH

  • Gains in risk assets were maintained despite more hawkish than expected Fed nL1N2QN1LU

  • AUD/USD fell from 0.7296 high when USD firmed after Powell press conference

  • Resistance at 10-day MA, which was 0.7303 yesterday and 0.7290 today

  • Break above 10-day MA would shift pressure to the upside

  • Support has formed at 0.7220/25 where bids are tipped

  • A break below 0.7220 targets 76.4 fibo at 0.7194

  • Ongoing Evergrande saga likely to impact AUD sentiment in short-term

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Sep 22 - 04:58 PM

Bank of America Global Research highlights three takeaways from today's Federal Reserve meeting

1. "Taper on track to be announced in November and be completed by mid-year. While the taper signal in the statement was vague - "may soon be warranted" - Chair Powell clarified in the press conference that they could be ready in the upcoming meeting (in November). Hence absent a significant disappointment in the employment data or financial market disruption, this strengthens our view that the Fed will announce and begin tapering in November

2. Committee members are edging toward higher rates: The Committee is now evenly split between the first hike in 2022 or 2023, which brought the median up to 0.25%. The consensus is now for 3 hikes in both 2023 and 2024, leaving rates at the end of the forecast horizon at 1.75%. As Chair Powell noted, this is still decently below the long-run funds rate of 2.5%, which means policy is still accommodative," BofA notes.

3. The case of higher inflation is building due to greater supply side constraints: Forecasts were boosted for core inflation modestly and Powell noted that the supply side is constrained and creating challenges for inflation. The Fed has become more concerned about persistent price pressures,  the supply side remains constrained for both goods and labor.

BofA Global Research
By Randolph Donney  —  Sep 22 - 03:36 PM
  • Sterling low at 1.36095 Wednesday, just above Aug, July's 1.3602/572 lows

  • Fed tapering and sooner, higher dot-plots trigger dive to the low

  • But sterling already oversold and by key support, BOE on Thursday

  • BOE may prelim two rate hikes next year, first in Q1

  • Sterling stabilized early by stocks bounce, less China angst

  • BOE may be tie-breaker, bulls need to closes to hold above July's lows

For more click on FXBUZ

Chart Click here

Refinitiv IFR Research/Market Commentary
By Christopher Romano  —  Sep 22 - 03:12 PM

EUR/USD traded in whip saw price action following the Federal Reserve Bank statement nW1N2PU03E as the U.S. rate market initially rallied before weakening but Fed Chair Jerome Powell's presser put a floor under US interest rates and ultimately rallied the dollar.

Powell said asset purchases still have a use but it's time to taper them.
He also said completing taper sometime around the middle of 2022 will be appropriate and that tapering has broad support on the committee. nW1N2B801K

The U.S. rate market erased their post-statement losses.
Ten-year yields US10YT=RR rallied off the 1.296% low and neared 1.35%.
December 2022 eurodollar EDZ2 prices fell from the session high and below trend line support.
It then struck a 17-session low.

Intense dollar buying ensued on the rate rallies.
EUR/USD erased all gains and turned negative.
It then hit a 23-session low after breaking the 1.1690/00 support zone.

Price action has reinforced already bearish technicals.
A daily bear engulfing candle is in place, daily and monthly RSIs have fallen further and the 38.2% Fib of 1.0636-1.2349 has been pierced again.

A break of the August 1.1664 EBS monthly low now seems probable.
Stops likely sit below and if run key support near 1.1600 will be tested.
Should bears clear that impediment EUR/USD could quickly trade toward 1.1490/1.1500 support.

For more click on FXBUZ

eurusd Click here

edz2 Click here

Refinitiv IFR Research/Market Commentary
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