Synopsis:

Danske Bank notes that while easing trade tensions may support the US dollar in the short run, structural capital outflows and weakening US fundamentals pose significant downside risks over the medium to long term.

Key Points:

• Short-term support: Recent tariff de-escalation offers a near-term tailwind for USD.

• Weak US data risk: Danske remains concerned that upcoming hard data could deteriorate, undermining sentiment.

• Structural shifts: A broader reallocation away from US assets continues, driven by diminished confidence in US policy and long-term fundamentals.

Conclusion:

Despite near-term stability, Danske views the USD as structurally vulnerable due to persistent investor hesitancy and the likelihood of portfolio rotation out of US markets.

May 14 (Reuters) - The dollar index reversed an earlier loss on Wednesday as Treasury yields firmed following comments by Fed officials and as Republicans advance elements of President Donald Trump's budget package. Chicago Fed President Austan Goolsbee said the Fed still needs more data to discern the direction of prices and the economy. Fed Vice Chair Philip Jefferson said recent inflation data point to progress though the outlook is uncertain due to the possibility new import taxes will drive prices higher.

U.S. data on Thursday includes producer prices, retail sales and weekly jobless claims. Qatar signed an agreement to purchase jets from U.S. manufacturer Boeing worth $200 billion during President Donald Trump's visit. European Central Bank supervisors are asking some of the region's lenders to assess their need for U.S. dollars in times of stress, as they game out scenarios in which they cannot rely on tapping the Federal Reserve under the Trump administration.

U.S. envoy Steve Witkoff and Secretary of State Marco Rubio will travel to Istanbul on Friday for Russia-Ukraine talks. Separately, Bloomberg reports sources as saying that the U.S. is not negotiating for a weaker dollar as part of tariff talks. EUR/USD was flat, reversing an earlier gain as higher Treasury yields and lower gold weighed. European Central Bank policymaker Joachim Nagel underlined the role of the U.S. dollar as a reserve currency for the global system, though sees the euro becoming stronger in that same role over the next few years. A daily gravestone doji may be a concern for EUR/USD bulls with further losses testing the 55-DMA at 1.1043. Risk reversals, however, favor calls with the one-year the most euro bullish in five years. EUR/CHF gained for a fifth day and was on pace to close above its 200-day moving average at 0.9405.

GBP/USD slipped back below its 21-day moving average ahead of Thursday's U.K. GDP report for March.

Bank of England interest rate-setter Catherine Mann said she voted to keep borrowing costs on hold last week because Britain's labor market had been more resilient than she expected. Cable continues to orbit the 1.33 level with gains likely capped by its 2025 high set on April 28 at 1.3445.

USD/JPY trimmed losses as Treasury yields firmed. The pair was also helped by the Bloomberg report that the U.S may not be seeking a lower dollar in trade talks. An Ichimoku cloud at 147.60 may limit USD/JPY gains whereas a double-bottom near 145.60 lends support.

AUD/USD slipped below its 200-day moving average amid weakness in metal prices.

Treasury yields were up 3 to 4 basis points. The 2s-10s curve was up about 1 basis points to +46.5bp.

The S&P 500 was little changed in mixed trading.

Oil prices fell 1.1% after a weekly build in US crude stocks.

Gold fell 2.4% to a one-month low on trade optimism while copper slipped 1.8%.

Heading toward the close: EUR/USD -0.12%, USD/JPY -0.46%, GBP/USD -0.35%, AUD/USD -0.71%, DXY +0.08%, EUR/JPY -0.58%, GBP/JPY -0.85%, AUD/JPY -1.18%.(Editing by Burton Frierson Reporting by Robert Fullem)

• NY opened near 1.1230 after 1.12655 traded on EBS in Europe's morning, pair then slid further

• US$ buying and a turn upward for US Treasury yields weighed down EUR/USD

• USD/CNH rally and drops in gold and EUR/JPY added additional weight on EUR/USD

• Pair neared 1.1175 before slightly bouncing, 1.1195 neared late, pair up only +0.07% late

• Daily gravestone doji candle formed which may be a concern for EUR/USD bulls

• Falling monthly RSI & hold below resistance near 1.1300 may also worry EUR/USD longs

• Euro zone Q1 GDP and US jobless claims & April PPI, retail sales are data risks Thursday
eurusd


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

Synopsis:

TD Securities views the recent calm in USD markets as a tactical reset, not a turning point. Despite noisy trade deal headlines, core structural drivers—like U.S. stagflation risk and deteriorating global confidence in the dollar—persist. TD continues to target a >5% drop in the USD Broad Index (BDXY) into year-end but prefers to wait for better entry points to reinitiate short USD positions.

Key Points:

• April recap: The month was marked by extreme volatility following “Liberation Day,” a major shift in U.S. trade policy, with Asian currencies rebounding and U.S. policy credibility tested.

• Trade deals = noise, not signal: TD sees recent trade announcements as more performative than substantive. Tariffs on China remain elevated, keeping the overall U.S. stance economically restrictive and inflationary.

• Tactical USD bounce likely: With TD’s USD sentiment index at cyclical lows and markets digesting data rather than headlines, the bank expects a temporary dollar rebound, creating better shorting opportunities.

• Positioning strategy: TD is not abandoning its bearish dollar view—only pausing tactically. They remain confident in a structural decline in the USD, especially if incoming data surprises to the downside.

Conclusion:

TD is staying patient, looking for a short-term bounce in the dollar to fade into, rather than chasing weakness at current stretched levels. The medium-term USD bear case remains intact, with trade policy, inflation risks, and shifting global flows as core drivers.

For the moment, the relative market stability that has followed the U.S.-China trade truce announced earlier this week favors sterling against the dollar, but only slightly, and that could change as well. Sterling extended its gains early Wednesday, breaking above its 10- and 21-day moving averages, eying a move toward 1.34, helped by modestly softer Treasury yields. GBP/USD now eyes its 2025 high at 1.3445, set on April 28, as traders shrug off a dollar bid earlier in the week that followed the temporary U.S.-China tariff rollback. Those developments had briefly lifted the dollar by softening global recession concerns. But, UK inflation expectations have remained firm — highlighted by BoE’s Huw Pill -- and U.S. data disappointed, widening yield spreads, supporting sterling and pushing GBP/USD toward the top of its 2025 range, defined by support at the 30-DMA near 1.3210 and resistance at the 2025 high of 1.3445. Attention is now on rate fundamentals and both the Fed and BoE are in data-dependent mode.

LSEG’s IRPR priced in up to four Fed cuts as recently as two weeks ago, despite the Fed’s cautious tone on cuts. Those bets have since been scaled back, with markets now expecting the BoE to stay on hold until August and the Fed until September.

Unless data or trade dynamics shift, GBP/USD is likely to remain anchored within the 1.32–1.3450 range.
GBP Chart:


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

Synopsis:

Société Générale refrains from recommending explicit short USD positions for now, citing policy-driven disruption in FX markets. Instead, they favor tactical long AUD and short CHF exposure, anticipating benefits from trade thaw and reduced geopolitical tension.

Key Points:

• USD view neutral for now: Despite President Trump’s desire for a weaker dollar and rising US yields, SocGen expects EUR/USD and USD/JPY to stay range-bound until late summer.

• Market uncertainty: Disconnected relationships between FX and rate differentials—similar to 2022—suggest traders are reacting more to political signals than fundamentals.

• AUD bullish bias: SocGen favors being long AUD amid signs of improving US-China trade dynamics.

• CHF bearish bias: Recommends short CHF positioning, expecting a decline in safe-haven demand as geopolitical risk potentially eases.

Conclusion:

SocGen avoids a direct USD short stance but sees selective opportunities: long AUD as trade tensions ease and short CHF as geopolitical risk subsides. Broader USD weakness is more likely after the summer once clearer policy and data signals emerge.

• Ether fell Wednesday, traded 2719.35-2580.62, was down -3.04% in early NY trading

• Drop followed Ether nearing the 50% Fibo of the Dec. to April drop on Tuesday

• That Fibo sits 2747.56, Ether hit 2737.39 on Tuesday before pulling back a bit

• Ether fell Wednesday despite equity gains & broad based US$ selling

• Sharp drop in gold may have helped weigh down Ether a bit Wednesday

• Ether's technical signals continue to highlight upside risks however

• Recent consolidation phase resolved with a fresh 3-month high being struck

• Rising monthly RSI, Ether's hold above rising 10- & 50-DMas adds to the bull signals

• Break of the Fibo & 2840/50 resistance could trigger stop loss buying

• The psychological 3000 level and resistance near 3200 & 3330/40 then come into focus
eth


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

Synopsis:

Goldman Sachs expects core retail sales to rise in April as consumers frontloaded purchases ahead of impending tariffs, while headline retail sales are likely to remain flat due to weak auto sales and falling gas prices.

Key Points:

• Core retail sales forecast: +0.4% m/m, driven by precautionary spending ahead of expected tariff-related price increases.

• Headline retail sales forecast: Unchanged, as lower auto sales and gasoline prices offset strength elsewhere.

• Tariff impact emerging: Consumer behavior appears responsive to trade policy developments, with early signs of demand shifting forward.

Conclusion:

Goldman sees the April retail sales report as an early reflection of tariff-driven consumer behavior, supporting resilient core demand but masking it under flat headline numbers due to sector-specific drags.

Synopsis:

MUFG attributes the sharp reversal in USD/JPY—up nearly 5% since April 21—to a combination of diminished US recession fears, opportunistic foreign equity buying by Japanese investors, and aggressive positioning unwinds by speculators.

Key Points:

• Reversal after strong JPY rally: From April 2 (tariff announcement) to April 21, the yen appreciated ~6% versus the USD. Since then, it has retraced nearly all of that, making it the worst-performing G10 currency over the recent period.

• Macro shift post-tariff de-escalation: US recession fears have eased thanks to softer trade rhetoric and a robust jobs report on May 3. The 2-year UST yield rose 45bps from its May 1 low, supporting USD strength.

• Japanese investor flows: Ministry of Finance (MoF) data showed ~$25bn of foreign equity buying by Japanese investors in April—at a time when USD/JPY was significantly lower. These equity purchases are typically less hedged, contributing to USD demand.

• Speculative unwind: CFTC data showed record JPY long positioning (~150k contracts) among asset managers and leveraged funds as of late April. The speed and scale of the USD/JPY rebound suggests rapid unwinding of those positions.

Conclusion:

The dramatic rebound in USD/JPY reflects a confluence of fading recession fears, opportunistic foreign asset buying by Japanese investors, and forced covering of crowded JPY long positions. With positioning now less extreme and fundamental drivers normalizing, the sharp rally may now enter a more consolidative phase.

(Adds title)

• AUD/USD rallied 0.6465-0.6501 overnight; higher Australia yields

helped buoy

• Lower US yields , US$ selling & iron-ore
gains also helped the rally

• Sellers emerged however; USD/CNH lifted back above 7.2025 & AUD/JPY fell below 94.50

• US$ selling abated as well; AUD/USD dropped, opened NY near 0.6465, down -0.08%

• Daily RSI diverged, daily gravestone doji formed; those may concern longs

• Rising monthly RSI, hold above slew of daily MAs gives longs some comfort however

• Remarks from Fed's Jefferson on the economic outlook may impact risk sentiment in NY
audusd


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

• AUD/USD helped to one-week high of 0.6501 by won gains vs USD on FX news

• South Korea's Choi discussed FX with U.S. Treasury official last week

• 0.6465 was late Asia/early Europe low for AUD/USD -- before South Korea news

• There is a big 0.6500 option expiry for the NY cut; A$1.5 billion strike

• 0.67 option strikes in demand (AUD/USD was last at 0.67 in October 2024)

• Australian employment data due at 0130 GMT; 20k f/c. Jobless rate f/c 4.1%

AUDUSD

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

• USD/JPY option implied volatility fell after U.S. China trade talks

• All expiry dates almost completely reversing post tariff rally from 2 April

• However, it met renewed demand beside implied volatility in other pairs Tues

• More gains Wed as USD/JPY extends setback from Mons 148.65 recovery peak

• 1-month implied volatility now 10.7 from 10.0 in Asia and 9.5 on Monday

• Risk reversals increased premium for downside vs upside strikes (chart)

• News of U.S./S.Korea talks on FX said to be aiding latest USD/JPY drop
USD/JPY FXO implied volatility


USD/JPY FXO risk reversals

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

• AUD/USD options show ongoing demand for upside strikes - 0.6700 popular

• Suggests traders seen potential for more AUD/USD gains over coming months

• Option risk reversals have seen a dramatic shift since April 2 tariffs

• Downside strikes spiked to 5-year highs over upside strikes in early April

• A full retracement sees downside strikes now trading lowest levels in a year

• Implied volatility setbacks meet demand before pre April 2 tariff lows
AUD/USD option risk reversals


AUD/USD FX option implied volatility

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

• Oversold conditions were one of the main restraints on this week's drop

• That stretched situation has since been alleviated

• Over $10billion was staked on a rise last week weighing on euro

• Traders - encouraged by support ahead 1.10 holding - likely bought the dip

• Others betting on a rise may have been encouraged to hold existing longs

• Trade truce lessens need to hold safer euros which was main basis for longs

• Euro may be negatively influenced by interest rates in future

•
EURUSD

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

• Offers pre-1.3322 keep lid on cable after ascent extension from 1.3140

• 1.3322 was last Friday's high (May 9). 1.3140 was Monday's four-week low

• Rise to threaten 1.3322 influenced by cooler than expected U.S. CPI data

• More offers likely pre-1.3350 (1.3345 was high after hawkish BoE cut, May 8)

• BoE MPC hawk Mann says UK labour market more resilient than thought

• China criticises UK trade deal with US, FT reports (deal agreed last week)

GBPUSD

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

• Steady at the base of a quiet, tight 1.3299-1.3320 range on FX Matching

• Recent BoE comments reflect very different outlooks from Taylor and Pill

• Opposing views are no great surprise amid the confusion caused by US tariffs

• No major UK data, BOE Deputy Gov Sarah Breeden speaks - uncertainty reigns

• Charts - mixed 5, 10, & 21-day moving averages, momentum studies conflict

• 21-day Bollinger bands contract - the daily charts are back in neutral

• Under pressure 1.3306 21-DMA, then last week's 1.3402 high first resistance

• Bears need a close below the resilient 1.3165, 0.3825 of the April rise
Andy

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

• Yen up against USD in Asia but remained on back-foot in the JPY crosses

• USD/JPY 147.66 to 147.01 EBS, back below 147.60-149.97 daily Ichimoku cloud

• Seems brief foray into cloud Monday-Tuesday rejected

• USD/JPY back in 146.73-147.69 hourly Ichimoku cloud, break below bearish

• Japanese exporters again good sellers with budgets assuming 147+ this FY

• Other players also noted selling, exuberance over US-China trade truce over?

• Softer US yields helping USD lower, JGB yields soft too in sympathy

• Option expiries not much of factor, nothing massive in immediate vicinity

• JPY crosses showing some weakness but generally more buoyant

• EUR/JPY 165.13 to 164.60 EBS, off but not far below 165.20 high yesterday

• GBP/JPY 196.41 to 195.60, high today best since 197.53 on January 8

• AUD/JPY 95.56 to 95.15, high yesterday 95.63 and best since 95.74 March 18

• Related comment , also , on JPY crosses

• On Japan data , BOJ comment
USD/JPY hourly:


EUR/JPY hourly:


AUD/JPY hourly:

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

• +0.1% in a tight range in Asia, as markets digest recent volatility

• China issued it's first rare earth magnet export permits since April

• Volkswagen suppliers on the list - critical materials will continue to flow

• Good news for VW and potentially for other Eurozone manufacturers

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

• Daily momentum studies conflict - a bearish setup remains despite the bounce

• A close above the 1.1324 21-day moving average would end the downside bias

• Monday's 1.1065 low then 1.1053 0.618% of the Mar/Apr rise are first support

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

• 1.1175 1.494 BLN and 1.1200 952 mln close strikes for May 14th
Andy

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

• JPY crosses remain very buoyant despite USD/JPY back-tracking lower

• Suggests Tokyo, other centres not as bullish on yen as in recent past

• That said, seems market not ready to turn to a bullish USD view

• Tokyo and players in other centres taking middle way, buying JPY crosses?

• EUR/JPY 164.85-165.13 EBS in Asia so far, near 165.20 high yesterday

• High yesterday best since 165.29 on Nov 8 '24, peak then 166.65 Oct 31

• GBP/JPY 195.95-196.41, best since 197.53 on Jan 8 earlier this year

• AUD/JPY very well bid as of late, 95.28-56 after rally to 95.63 yesterday

• 95.63 just shy of 95.74 high on Mar 18, 96 try in cards?

• Cross on hold for now between its 100/200-DMAs at 94.49/96.58

• On EUR/JPY , USD/JPY , for more click on [FXBUZ]

EUR/JPY:


GBP/JPY:


AUD/JPY:

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

• Steady after closing up 1%, back at familiar levels with the USD off 0.75%

• UK's Reeves and Bailey hope the new repo system will make money for the BoE

• No major UK data, BOE Deputy Gov Sarah Breeden speaks - uncertainty reigns

• Trump's Middle East tour will generate plenty of news if Tuesday is a guide

• Charts - mixed 5, 10, & 21-day moving averages, momentum studies conflict

• 21-day Bollinger bands contract - the daily charts are back in neutral

• Under pressure 1.3306 21-DMA, then last week's 1.3402 high first resistance

• Bears need a close below the resilient 1.3165, 0.3825 of the April rise
Andy

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

• Steady early after closing up 0.9% with the U.S. dollar off 0.76%

• The Euro recovered most of Monday's post-U.S.-China tariff cut deal

• Ukraine's Zelenskiy insists on face-to-face talks with Putin in Istanbul

• Merz: EU to tighten sanctions on Russia if no progress on Ukraine this week

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

• Daily momentum studies conflict - a bearish setup remains despite the bounce

• A lose above the 1.1323 21-day moving average would end the downside bias

• Monday's 1.1065 low then 1.1053 0.618% of the Mar/Apr rise are first support

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

• 1.1175 1.494 BLN and 1.1200 952 mln close strikes for May 14th
Andy

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

• AUD/USD +1.8% from Tue 0.6358 low as USD buying dissipated overnight

• U.S. inflation lower than forecast, CPI 2.3% y/y (Reuters poll 2.4%)

• Mon's 'negative USD trade' exodus usurped by improving risk-sentiment

• AUD breaks back above 0.6456 200-DMA, sights set on 0.6550 resistance

• AU wage data due 0130 GMT Wed, employment Thur (Reuters poll +25.0k jobs)

• Overnight range 0.64015-785, support 0.6355 0.6180, resistance 0.6550 0.6687
AUD Daily 200-DMA


AUD Hourly Bollinger Study

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

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)