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By Randolph Donney  —  Apr 17 - 10:15 AM

USD/JPY's breakout above 152 on strong U.S. data and hawkish Fed comments has become overbought as the pivotal 155 level and major technical targets at 155.20 are neared, making a breakout before consolidation or a correction more difficult.

Daily RSIs have surged to their most overbought since October 2022, the month the BoJ intervened to keep USD/JPY from clearing 152.
Today's modest retreat and first day without a new high since the 152 breakout, brings the first bearish rise in the trailing 10-day Bolli that often triggers a return to the 10-day moving average, last by 153.

The 10-week Bolli and weekly ATR-projected range tops are at 154.92/5.22, suggesting little space for further gains, at least this week.

And though Treasury-JGB yields spreads remain quite bullish, and regardless of hawkish U.S. data and Fed Chair Powell on Tuesday disallowing the prospect of rate cuts until a disinflationary data trend is reestablished, two-year Treasury-JGB yield spreads are 5bp below last week's 2024 peak and 10-year spreads are 4.5bp below Tuesday's 2024 highs.

The JGB yield curve continues to bear steepen, even if only 25bp of further 2024 BoJ rate hikes are being priced in.

The wild card for the biggest net spec USD/JPY long since 2007 is BoJ intervention.
There hasn't been a fresh episode of serious saber rattling this week and the assumption is intervention wouldn't reverse the macro-driven uptrend, just provide a correction and a better buying opportunity.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Apr 17 - 09:30 AM

Synopsis:

Société Générale (SocGen) forecasts potential downward pressure on EUR/USD, possibly driving the currency pair below 1.05, following a reassessment of the Federal Reserve's interest rate policy. An unexpected uptick in U.S. inflation has led SocGen’s U.S. economists to revise their outlook, eliminating expectations of Fed rate cuts in 2024. This adjustment contrasts with current market expectations, which still anticipate nearly two rate cuts within the year.

Key Points:

  • Shift in Fed Expectations: Recent data showing a surprise increase in U.S. inflation has prompted a significant shift in SocGen's forecast, with no Fed rate cuts expected for 2024. This contrasts sharply with the broader market's anticipation of rate reductions.

  • Impact on EUR/USD: The shift in policy expectations is likely to lead to a hawkish repricing in U.S. rate markets, putting downward pressure on EUR/USD. The currency pair, which has historically aligned closely with the two-year yield differential between the U.S. and Eurozone, may see further declines due to these revised expectations.

  • Relative Yield Movements: The yield spread between U.S. and Eurozone two-year government bonds has widened, particularly after the recent U.S. inflation data. This widening spread supports a stronger U.S. dollar relative to the euro.

  • Market Pricing and Repricing Risks: Although the market has adjusted to a later start of Fed easing compared to the European Central Bank (ECB), there may still be room for further adjustment. This suggests additional potential for EUR/USD to decline as the market fully digests the implications of sustained U.S. monetary policy tightening.

Conclusion:

As SocGen revises its outlook on the Federal Reserve's rate path, significant implications for EUR/USD emerge, with the potential to dip below 1.05. This shift is primarily driven by the unexpected persistence of U.S. inflation and the subsequent adjustment in rate expectations. Investors and traders should closely monitor U.S. economic releases and Fed communications in the coming weeks, as these will be critical in shaping market expectations and currency movement.

Source:
Société Générale Research/Market Commentary
By eFXdata  —  Apr 17 - 08:30 AM

Synopsis:

Credit Agricole analyzes the likelihood and implications of a potential joint G7 intervention to stabilize the Japanese Yen (JPY) amidst recent currency volatility. Despite historical precedents, such as the 2011 intervention following the Tohoku earthquake, current economic conditions and policy stances suggest that a joint intervention remains unlikely.

Key Points:

  • G20 Commitment and Current FX Policy: The G20 nations are committed to avoiding exchange rate manipulation and allowing market-determined rates, with interventions reserved only to address excessive volatility. This policy backdrop frames the discussions at the upcoming G7 and G20 meetings in Washington.

  • Statements from Japan and South Korea: Ahead of the meetings, Japan's Finance Minister Shun’ichi Suzuki and South Korea's Finance Minister Choi Sang-mok have expressed serious concerns about their currencies' recent declines. They indicated potential unilateral steps to counter volatility but stopped short of confirming plans for joint intervention.

  • Historical Context of Joint Interventions: The last significant joint intervention in the JPY occurred in 2011, driven by a specific economic shock and marked misalignment of the JPY with economic fundamentals, conditions which do not currently apply.

  • US Position on Joint Intervention: The stronger USD is seen as beneficial to the US by helping to tighten financial conditions and control inflation. This stance makes joint intervention less appealing to US policymakers, especially given the USD's role in influencing global economic conditions.

Conclusion:

While the recent joint statement by Japan and South Korea raises the profile of currency issues at the G7 and G20 meetings, the conditions for a joint intervention to support the JPY are not favorable. The USD/JPY and EUR/JPY are considered fairly valued by Credit Agricole's FAST FX models, and the strategic interests of the US do not align with a need to weaken the USD. Therefore, while discussions on FX volatility are expected to occur, significant joint intervention remains unlikely unless there are dramatic shifts in economic fundamentals or geopolitical conditions.

Source:
Crédit Agricole Research/Market Commentary
By Richard Pace  —  Apr 17 - 06:50 AM

Price action in FX derivatives is consistent with a growing risk of increased volatility and deeper EUR/USD declines, but low cost options are still available for holders to participate should the situation arise.

Implied volatility is a realised volatility gauge and key component of an option premium, so it's no surprise to see it surge to new long-term highs, with an additional premium for EUR/USD downside strikes.
However, these higher premiums can be advantageous for more exotic type options.

A regular vanilla call option with a strike at 1.0600 and expiry in 1-month would cost 60 USD pips, or 33 USD pips with the strike at 1.05 and 17 USD pips with the strike at 1.0400 (break-even is the strike minus the premium).
However, the additional implied volatility premium for downside strikes will cheapen options with a knock-out trigger below the strike as that trigger is deemed more likely to be touched and kill the option.

For example, a 1-month expiry 1.0600 USD call with a knock out trigger at 1.0300 is half the price of its vanilla equivalent, albeit dead if 1.0300 trades.
Longer expiries and triggers closer to strike/current spot will be even cheaper.

Alternatively, vanilla EUR put/USD call spreads allow holders to sell EUR/USD at one strike providing they buy at another below it.
They are similar to KO-trigger options in that they are cheaper and profit potential is limited to the lower strike, but remain in play until expiry.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Apr 17 - 06:25 AM
  • AUD/USD holds above 0.6400 as higher iron ore prices lend support to AUD

  • Iron ore is Australia's biggest export earner. 0.6400 was Asian session low

  • 0.6390 was five-month low Tuesday, after USD rose on hawkish Powell guidance

  • AUD/USD offers are tipped ahead of 0.6450 (0.6443 was February's low)

  • There is a big 0.6435 option expiry on Thursday; A$1.5 billion strike

  • Australian jobs data due Thursday: employment f/c 10k; jobless rate f/c 3.9%

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Apr 17 - 04:35 AM
  • USD/JPY steady to softer just below 154.79 Tues trend high

  • Resistance and offers pre-155.00 on Japanese exporter offers, option defense

  • Massive option barriers presumed at 155.00, stops above very large

  • Vanilla expiries today: large at 153.00, 153.50 and 155.00

  • Some USD longs touted to be looking to book some profits ahead of 155.00

  • On a deeper pullback: minimum correction of 146.48-154.79 is 152.83

  • Initial support at 153.90, Tues low point

  • Caution on possible MoF moves: intervention threat nL2N3GQ04H

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Apr 17 - 03:50 AM
  • Loss consolidation with a degree of upside risk

  • This week's doji candles suggest bears are lacking conviction

  • Indecision in the low 1.06s could trigger a larger adjustment higher

  • Daily RSI is bumping along the 30 line and negative momentum is fading

  • A minimum correction of the 1.0885-1.0602 drop is at 1.0669

  • A return to the Tues 1.0654 high could also ease the over sold pressure

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Apr 17 - 02:35 AM
  • Cable rises to 1.2450 on slightly higher than expected UK March CPI print

  • 3.2% YY vs 3.1% f/c. 1.2450 = intra-day high (1.2440 was Asia high, pre-CPI)

  • On Tuesday, BoE chief Bailey said "strong evidence" of falling UK inflation

  • Above f/c UK CPI lessens risk of BoE rate cut as early as next month (May 9)

  • Resistance levels beyond 1.2450 include 1.2471 (Tuesday's high) and 1.25

  • 1.2406 was five-month low on Tuesday, after dollar rose on Powell guidance

Source:
Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Apr 17 - 02:30 AM
  • EUR/USD has dropped to 1.0601 EBS in 2024 from Dec's 1.1139

  • The sell-off has been fuelled by the liquidation of longs

  • Should pair drop below 1.0596 it will likely reach 2023 low at 1.0448

  • A deeper drop will probably be fuelled by establishment of short positions

  • Chart supports bigger USD rally nL2N3GQ0CO

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Apr 17 - 02:10 AM
  • Early Wed gains fade quickly: 50-day moving average, 0.8552, intact

  • Fourteen day momentum and RSI still reflecting price weakness

  • We remain short from 0.8568 for 0.8510 with a trailing stop at 0.8580

  • A drop under 0.8527, Apr. 15 low, needed to open up our target

  • Key resistance points at 50DMA and 100DMA, 0.8574 for the latter

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Apr 16 - 11:50 PM
  • +0.1% in a quiet 1.2426-1.2440 range on D3 with the USD off 0.1%

  • Risk appetite based in Asia - E-mini S&P +0.2%, Brent oil -0.55%

  • BoE's Bailey is optimistic inflation is falling - CPI will be key

  • See the chart below for Reuters polls on the UK's inflation data

  • Charts; 5, 10 & 21 day moving averages fall with the 21-day Bollinger bands

  • Daily momentum studies slip - daily charts show a strong bearish trend

  • Move targets 1.2369, 0.618% Oct-March rise then the 1.2045 Oct 23 base

  • 1.2471 London top and Monday's 1.2498 high are initial resistances

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Apr 16 - 04:30 PM

Synopsis:

ING discusses the implications of a potentially weaker Chinese renminbi (CNY) on the broader currency markets, noting that recent movements suggest an increased likelihood of PBoC flexibility in currency management. This change could further strengthen the already bullish tone for the USD, impacting various global currencies, especially those in Asia and other emerging markets.

Key Points:

  • Impact on Asian Currencies: The strength of the USD is already affecting Asian currencies, with notable declines in the Indonesian rupiah, Korean won, and Japanese yen. The stability of the renminbi up to now has inadvertently caused its trade-weighted value to surge, highlighting its relative strength amid regional currency weakness.

  • Renminbi Stability and Market Sensitivity: Despite low inflation and weak export growth in China, the renminbi has remained relatively stable. However, recent PBoC actions, including fixings that hint at a willingness to allow some depreciation, have heightened market sensitivity to daily USD/CNY settings.

  • March 22 PBoC Experiment: An experiment with a fixing above 7.10 led to significant losses for both onshore and offshore renminbi, suggesting market apprehension towards renminbi depreciation. The recent fixing at 7.1028 indicates a possible shift towards allowing greater currency flexibility.

  • Global Dollar Impact: A strategy by the PBoC to permit a weaker renminbi could enhance the USD's strength globally, particularly affecting currencies with high correlations to the CNH, such as the Australian and New Zealand dollars in the G10, and the South African rand in emerging markets.

Conclusion:

The possibility of the PBoC easing its stance on the renminbi's strength poses significant implications for currency markets worldwide, potentially reinforcing a bullish outlook for the USD. This scenario warrants close monitoring by investors, as shifts in China’s currency policy could influence global trade and currency valuations extensively, affecting both emerging markets and major economies.

Source:
ING Research/Market Commentary
By John Noonan  —  Apr 16 - 09:50 PM
  • NZD/USD continues to grind higher in wake of NZ CPI release nL2N3GP3HG

  • NZ yields higher as market prices out chance of an August rate cut

  • NZD/USD up 0.40% and approaching Monday's 0.5906 high

  • Resistance is at former support around 0.5940 where sellers tipped

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

  • Only a break above the 10-day MA at 0.5971 would suggest bottom is forming

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Apr 16 - 08:25 PM
  • +0.05% in early Asia after closing -0.15% with the USD and UST yields firmer

  • Bank of England's Bailey sees strong evidence of falling UK inflation

  • BOEWATCH prices 26pts of rate cuts in September- today's CPI will be pivotal

  • Charts; 5, 10 & 21 day moving averages fall with the 21-day Bollinger bands

  • Daily momentum studies slip - daily charts show a strong bearish bias

  • Move targets 1.2368, 0.618% Oct-March rise then the 1.2045 Oct 23 base

  • 1.2471 London top and Monday's 1.2498 high are initial resistance

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Apr 16 - 07:55 PM
  • Steady after closing -0.05%, with the USD +0.1%, as UST yields climbed

  • Fed's Powell rates higher for longer - ECBs Lagarde remains dovish

  • Markets not so sure, 10yr bund up 5bp to 2.486%, 10yr UST +3bp to 4.657%

  • ECB Chair Lagarde speaks tonight as do the Fed's Mester and Bowman

  • Charts - daily momentum studies fall, 21-day Bollinger bands expand

  • 5, 10, and 21-day moving averages fall - the daily charts remain bearish

  • 1.0647 5-day moving average then 1.0653 European high are first resistance

  • 1.0601 New York and 2024 low then 1.0594, .786 of the Oct-Dec rise support

  • 1.0605/10 895mln and 1.0630/35 1.765BLN close strikes for April 17th

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Apr 16 - 07:00 PM
  • AUD/USD opens -0.67% as USD broadly firmed on higher US yields nL2N3GP26DnL2N3GP2OU

  • AUD worst performer as metals fell after weaker China monthly China data nL2N3GP0MR

  • AUD/USD traded to a 5-month low at 0.6389 before finding bids

  • Minor support at a Nov 2023 weekly low at 0.6352 where more buying tipped

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

  • Objective of trend lower is the Oct 26 trend low at 0.6271

  • Resistance is at the 10-day MA at 0.6516 with sellers ahead of 0.6450

  • Downward momentum to persist while sentiment decidedly bearish

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Apr 16 - 03:00 PM

Synopsis:

Danske Bank provides an analysis of the near-term outlook for the global oil market, noting its resilience in the face of recent geopolitical tensions. Despite Iran's missile and drone attacks on Israel, Brent crude prices have remained stable around USD 90 per barrel. Danske predicts a stabilization in Brent prices at approximately USD 85 per barrel in the near term, influenced by OPEC+ capabilities and potential U.S. actions regarding strategic oil reserves.

Key Points:

  • Current Market Stability: Brent crude has demonstrated remarkable stability, maintaining around USD 90 per barrel even amid recent geopolitical upheavals and a significant rally in previous weeks. This stability underscores the market's robustness against geopolitical shocks.

  • Role of OPEC+: OPEC+ plays a crucial role in maintaining price stability, possessing significant excess capacity to mitigate potential price spikes. This capacity is particularly vital in scenarios where geopolitical tensions could otherwise lead to price escalations.

  • U.S. Strategic Options: The U.S. holds strategic levers that could influence oil prices, including the potential tightening of sanctions on Iranian oil exports or adjustments to the U.S. strategic petroleum reserves. These measures could involve halting purchases or even selling from the reserves to counterbalance disruptions in global oil supplies.

  • Impact on Oil-Linked Currencies: The anticipated stabilization of oil prices is expected to cap the near-term upside potential for oil-linked currencies, such as the Norwegian Krone (NOK). This effect reflects the direct relationship between oil price movements and the economic outlooks of oil-exporting nations.

Conclusion:

Danske Bank anticipates a period of relative stability in oil prices, with Brent expected to average around USD 85 per barrel in the near term. This forecast is based on the market's current resilience, strategic capacities of OPEC+, and possible interventions by the U.S. in its oil reserve strategies. Investors and policymakers should monitor these developments closely, as they have significant implications for global energy markets and related currencies.

Source:
Danske Research/Market Commentary
By Randolph Donney  —  Apr 16 - 03:35 PM
  • USD/JPY is closing the gap on major resistance at 155.00/20

  • The 155 figure hurdle is also by the upper 10-wk Bolli

  • The weekly ATR-projected top is by 155.20

  • As are two 161.8% Fibo objectives off major 2023 lows

  • Daily RSIs are the most O/B since 2022, but not bearishly diverging

  • Top of rising channel off Dec & Mar lows vs Jan & Feb highs is @156.40 Wed

  • A possible backstop if 155.20 is broken above before a correction

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Christopher Romano  —  Apr 16 - 01:40 PM
  • NY opened near 1.0625 after 1.06025 traded on EBS overnight, rally extended

  • Pair hit 1.06535 with help from EUR/JPY rallying to 164.655 & some US$ sales

  • Pair turned down again however, yields US10YT=RR & US$ firmed again

  • Comments from Fed Chair Powell helped drive EUR/USD to a fresh 5-month low

  • Stocks ESv1 sank and gold XAU= erased some earlier gains

  • EUR/USD traded 1.06013 on EBS, was down-0.20% late in the session

  • Techs are bearish; RSIs are falling, monthly inverted hammer in place

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Apr 16 - 01:30 PM

Synopsis:

Bank of America (BofA) advises investors to consider fading the recent weakness of the Scandinavian currencies—Swedish Krona (SEK) and Norwegian Krone (NOK)—against the Euro (EUR), citing quantitative models and fundamental factors. Both SEK and NOK have shown significant depreciation against the EUR in Q1 2024, but BofA’s analysis suggests these movements may have gone too far, with a potential reversal on the horizon.

Key Points:

  • Quantitative Analysis: BofA’s evaluation of EURSEK and EURNOK movements relative to rate differentials, moving averages, and fair values (as derived from dynamic factor models) suggests that both Scandinavian currencies are currently either oversold or undervalued versus the EUR.

  • Fundamental Outlook: The bank expects both EURSEK and EURNOK to end the year lower than current levels. This outlook is predicated on the assumption of the Federal Reserve beginning to cut rates by December 2024 and a soft landing scenario in the U.S. economy.

  • Supporting Factors for NOK and SEK:

    • NOK: Supported by stable oil prices, resilient economic growth within Norway, and relatively light positioning in the currency market.
    • SEK: Benefits from reduced risks of a hard economic landing in Sweden and the unwinding of previously established short positions against the SEK.
  • Risks: While the overall outlook is favorable for the Scandinavian currencies, sticky U.S. inflation and unexpected moves by the Federal Reserve pose potential upside risks to the EUR/Scandies exchange rate forecasts.

Conclusion:

BofA’s analysis indicates a promising opportunity for investors to fade the recent weakness observed in the Scandinavian currencies against the Euro. Given the quantitative and fundamental factors highlighted, there appears to be potential for SEK and NOK to appreciate against the EUR as the year progresses. Investors should monitor key economic indicators and central bank actions, particularly from the Fed, as these will significantly influence the trajectory of these currencies.

Source:
BofA Global Research
By Christopher Romano  —  Apr 16 - 01:25 PM

Fixes typo in headline

  • NY opened near 0.6310, pair rallied above 0.6325 early then turned lower

  • US yield US10YT=RR, equity ESv1 drop & buoyant UDS/CNH weighed

  • Pair traded to a fresh 5- month low, 0.63975 hit, pair then bounced

  • Gold XAU= turned positive, stocks neared flat, USD/CNH neared flat

  • AUD/USD bounced above 0.65305, traded down -0.53% late in the session

  • Techs are bearish; RSIs are falling, monthly inverted hammer in place

  • Australia March composite leading index is a data risk in Asia

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Apr 16 - 10:45 AM

Synopsis:

Société Générale (SocGen) projects a potential decline for GBP/USD towards 1.20 following disappointing UK labor market data. The data underscores concerns about weak productivity and inflation persistence, suggesting a challenging economic outlook for the UK, which contrasts starkly with the more robust U.S. economic performance.

Key Points:

  • Depressing UK Labor Market Report: The latest labor market data from the UK paints a grim picture, with underlying ex-bonus wage growth remaining high at 6% year-over-year in February, only slightly down from 6.1% the previous month. Additionally, employment figures have dropped significantly, with a 3-month/3-month change showing a decrease of 156,000 jobs.

  • Increased Unemployment Rate: The unemployment rate has risen from 4.0% to 4.2%, adding to the economic woes and heightening concerns about the overall health of the UK labor market.

  • Monetary Policy Implications: Despite the pressing need for economic stimulation, the Bank of England (BoE) may approach rate cuts cautiously due to persistent wage inflation. SocGen's analysis aligns with comments from BoE MPC member Megan Greene, emphasizing the unique challenges faced by the UK economy compared to the U.S., particularly in terms of productivity and inflation.

  • Currency Impact: The weak labor market data and cautious outlook on rate cuts are likely to exert downward pressure on the GBP, particularly against the USD. SocGen sees GBP/USD potentially testing the 1.20 level as market conditions evolve. Meanwhile, EUR/GBP is near the lower end of its range and could see upward movement.

Conclusion:

SocGen forecasts a challenging period ahead for the British pound, particularly against the U.S. dollar, driven by stark contrasts in economic conditions between the UK and the U.S. and the somber implications of the latest UK labor data.

Source:
Société Générale Research/Market Commentary
By Randolph Donney  —  Apr 16 - 10:00 AM
  • USD/JPY briefly spiked down from 154.77 to 153.90 on EBS

  • No apparent news and move not high volume, so was bought into

  • Longs getting jittery as BoJ intervention risk seen high by 155

  • But uptrend getting fresh support from rising Tsy yields

  • Howver, prices are the most O/B since Oct. 2022's 151.94 peak

  • So risk vs reward for new longs a little riskier than on 152 breakout

  • Also have twin Fibo objectives at 155.20 as a possible P/T spot

  • US data mixed, but Fed speakers keep rate cuts off the table for now

  • IMM specs most net long since 2007 also hints at O/B condition

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Apr 16 - 09:30 AM

Synopsis:

Goldman Sachs highlights the U.S. as the only G10 nation where recent inflation data has exceeded expectations, suggesting potential for continued upward movement in the USD. Despite a favorable cyclical backdrop and currency management strategies that may moderate broad dollar gains, the firm anticipates that currencies sensitive to policy shifts, particularly the EUR, may underperform against the dollar due to this divergence.

Key Points:

  • Unique Position of U.S. Inflation: The U.S. stands out among G10 countries with its latest inflation figures surpassing forecasts, marking a significant divergence that could influence currency markets. This is seen as a critical factor driving the relative strength of the USD.

  • Impact on Policy-Sensitive Currencies: With inflation pressures mounting, currencies that are particularly sensitive to policy decisions, like the EUR, are expected to lag behind the USD. This trend is likely to persist as markets and central banks navigate these inflationary developments.

  • Market and Policy Implications: Recent shifts in the market align with these divergent inflation data points, entering a crucial period for policy decisions that could further influence currency dynamics. Goldman Sachs suggests that this context sets the stage for significant USD advantages in the coming period.

Conclusion:

Goldman Sachs projects continued USD strength based on the unique inflation dynamics in the U.S. compared to other G10 countries. This inflation surprise not only supports a stronger dollar but also sets expectations for the underperformance of policy-sensitive currencies like the EUR. As markets adjust to these realities, Goldman sees a critical period ahead for currency and monetary policy decisions, recommending close monitoring of these developments for investment and trading strategies.

Source:
Goldman Sachs Research/Market Commentary
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