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Nov 21 - 03:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD's 4.2% Fed-Hope-Led Rise Stalls By Key Hurdle

By Randolph Donney  —  Nov 21 - 01:35 PM

The dollar index rose on Tuesday, reclaiming a tiny portion of the 4% fall it suffered since the Nov.
1 Fed meeting as shorts took profits before the release of the FOMC minutes.

The dollar's recent slide has been accelerated by a spate of soft data on jobs, CPI and retail sales data, and it was not the only market susceptible to traders' desire to book gains.

Profit-taking hit the Nasdaq index, despite falling Treasury yields, after it made new 2023 highs on Monday a short distance from 2021's record highs.

Tuesday's existing home sales were below-forecast and at their lowest since 2010, a reminder that the Fed's huge 5.25% rise in rates remains a force to be reckoned with for the economy, one that could weigh on the dollar for some time.

EUR/USD fell 0.33%, giving up earlier gains to 1.09655 that only marginally transcended the 61.8% Fibo of the 2023 downtrend at 1.0960.

Unlike USD/JPY, where net spec long positions last week hit their highest since 2017, providing plenty of fuel for a fall, EUR/USD net longs were their highest since September and 42% below this year's high from May.

ECB officials have, along with most Fed officials, been trying to temper rate cut expectations, but the market favors them beginning in April and the U.S. central bank in May.

USD/JPY fell 0.1%, well off its 147.155 lows, that probed last month's 147.30 spike lows and neared a short-term Fibo target by 147.
Recent shorts lightened up before Tuesday's Fed meeting minutes and with risk markets selling off slightly.

A series of sizeable 149 option expiries also aided the bounce from somewhat oversold readings.
But USD/JPY could well be headed for a 10-yen slide from 2023/22's 151.92/94 double-top toward the 200-day moving average, now at 141.55.

Sterling rose 0.17%, clearing the 100-DMA and hitting a 10-week high, helped by somewhat hawkish comments from BoEspeakers.
The market is pricing in the first BoE rate cut in June, despite the BoE not predicting inflation returning to target over the next two years.

Dollar was modestly lower versus CAD, despite Canada CPI a shade below forecast.

USD/CNY fell 0.46%, with reporting from Reuters that major state banks have been active yuan buyers.
Tuesday's 7.1285 USD/CNH low tested the 200-DMA at 7.1299 and the lowest since July.

durable goods and jobless claims are top releases for Wednesday.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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