MUFG Research discusses the USD outlook and sees a scope for further softness in the near-term on the decline in implied yields. 

"The implied yield on the December 2022 Fed Fund futures contract has fallen back to 0.24% after hitting a peak of 0.32% at the start of this month. The price action provides some tentative evidence that the Fed’s strong commitment to maintain loose monetary policy could be helping to dampen upward pressure on US yields and the US dollar in the near-term," MUFG notes. 

"The Fed’s continued commitment to loose monetary policy remains a key assumption behind our view that it is still too premature to expect a sustained US dollar rally at the current juncture. At the very least, recent price action suggests that markets are now better priced for the improving US economic outlook following the adjustments that took place in Q1,' MUFG adds. 

• US$ sinks in overnight trade as US 10-yr yield US10YT=RR sinks nears 1.60%

• Equities ESv1, copper HGv1, AUD/JPY gain while USD/CNH dips below 6.5300

• AUD/USD bounces off the 10-DMA, rallies above the 21-DMA & 0.76955 trades

• Little resistance now until 0.7745/75 & the daily cloud (0.7774/0.7883)

• Daily, monthly RSIs rising & not overbought, imply upside momentum remains

• Slew of Fed speakers, especially Fed Chair Powell, are risks today

• For more click on FXBUZ

• AUD/USD boosted by USD sell off and strong consumer confidence data

• From a test sub 0.7600 early Tues, it's rallied 0.7635-0.7695 Wed

• However, major resistance ahead - 0.7700 option barriers likely

• 55-dma 0.7709, and 38.2% Fibo retrace of 0.8007-0.7533 drop at 0.7713

• Bulls need break/close above 0.7709-13 to target 50% Fibo 0.7769

  
  

  
  

For more click on FXBUZ

Despite the latest EUR/USD push to recovery highs at 1.1974, the reaction has been tame in the forward-looking FX options market, suggesting traders aren't betting on a sustained EUR/USD rise yet.

Options thrive on volatility and outsized directional moves, using implied volatility to gauge how much and determine premiums.
However, implied volatility remains depressed near pandemic lows, and additional premium for EUR calls over puts (topside versus downside strikes) is also tame.

Benchmark one-month implied volatility is 5.75 versus 5.55 Tuesday.
One-month 25 delta risk reversals are just 0.1 vol premium for EUR calls over puts.

Outright demand for EUR calls, which would benefit from further EUR/USD gains, is also light.

There are multiple daily highs from early to mid March ahead of well-touted 1.2000 option barriers, which could be tough to crack.
More technical resistance lies in the lower to mid 1.20s if they do eventual go nL1N2M70C2.

However, keep an eye on option premium and flows.
Further gains might reinforce any growing topside conviction.

For more click on FXBUZ

• Big bullish jolt after two-day drift, puts underlying trend in play

• Not a run-away move but still hints at larger gains despite soft Wed open

• Daily consolidation potentially a bull continuation pattern

• Holding a cloud break and giving a cloud top target at 0.8815

• Minimum correction of 0.9229-0.8472 drop cleared at 0.8651, 38.2% is 0.8761

• Below 0.8645, Mar 24 high, and bull trend questioned

• We consider buying dips to this level with a tight stop

  For more click on FXBUZ

• USD/JPY's dive under 108.99 Fibo support is a very bearish development

• 108.99 Fibo is 23.6% of the 102.60 to 110.97 (January to March) EBS rise

• The negative outlook would be confirmed with a daily close under 108.99 Fibo

• That would increase the odds of a deeper setback to 107.77 Fibo

• 107.77 Fibo is a 38.2% retrace of the same 102.60-110.97 gain

• Our offer is at 109.65. USD/JPY Trader TGM2336. USD bearish nL1N2M52N2

• EUR/JPY has seen a 130.06-34 range Wednesday according to EBS prices

• Weaker US yields have lifted EUR/USD, but it faces significant resistance

• Broken 38.2% Fibo of 1.2349-1.1704 at 1.1950 for 1.1967

• 55-dma 1.1974 next resistance, 1.2000 option barriers said to be large

• Option barriers attract defence from those who will profit if they hold

• Other's tend to piggy back that defence, to add resistance

• Break of 1.2000 targets 50% Fibo at 1.2026 and 100-dma 1.2054

• Option implied volatility demand from pandemic low - 1-month 5.8 vs 5.5

  
  

  
  

For more click on FXBUZ

• AUD/USD gains 0.3% in Asia as USD stays on defensive on sagging U.S. yields

• Buoyed as expectations of runaway U.S. inflation are reassessed

• Boosted by Kiwi rallying to 3-week highs after RBNZ holds rates nL1N2M704Q

• Well-received sale of A$14 bln of new 2032 government bonds Tues boosts AUD

• Westpac-MI consumer sentiment index surges to 11-year peak in Apr, supports

• Resistance 0.7675-80, 0.7700, 0.7715, support 0.7635, 0.7620, 0.7590-0.7600

• For more click on FXBUZ

• +0.1% with the USD softer in a 1.3752-1.3771 range with plenty of interest

• UK trial on mixing COVID-19 vaccines adds Moderna and Novavax nL8N2M6545

• UK continues to lead the way in Europe on managing the vaccine rollout

• Charts; momentum studies conflict, 5, 10 & 21 daily moving averages coil

• 21 day Bollinger bands slide - neutral setup, as the range dominates

• 1.3670 March/April low, 1.3647 lower 21 day Bolli, 1.3637, 76.4% 2021 rise

• Strong support around 1.3650 - major news or USD surge needed to break

• 1.3919 April high range top - 1.3783 10 DMA is initial resistance

For more click on FXBUZ

TD Research discusses EUR/JPY outlook and likes short exposure in spot targeting a move towards 126.

"While we think it is problematic to be long the yen vs. the USD owing to the higher Tsy yield backdrop, we prefer to express this on crosses that offer some insulation," TD notes. 

"EURJPY has thus far rejected multi-year trend line resistance, which broadly coincides with 130.50. A move above will require a much more impressive EUR setup, which still seems like a distant proposition at this time with Europe poorly managing its vaccine rollout and delaying its participation in a global growth uptick. As a result, we have added a short EURJPY position," TD adds. 

• RBNZ left policy on hold as expected and the NZD/USD only had a small reaction nS9N2KV00S

• RBNZ statement stated the outlook remains "highly uncertain"

• Statement also indicated they could lower the OCR "if necessary"

• The NZD/USD whipped between 0.7068/48 and has settled unchanged at 0.7060/65

• Resistance is at April 5 high at 0.7070 and sellers tipped ahead of 0.7100

• NZD/USD closed yesterday above the 21-day MA (0.7055) so techs lean bullish

• For more click on FXBUZ

• AUD/USD traded up to 0.7653 in early Asia before sellers came in and capped

• It was the first time it traded above the 21-day MA (0.7648) since March 18

• There was no reaction to Aus consumer confidence - which hit an 11-year high nS9N2KV00Q

• Support is at the 10-day MA at 0.7632 and break would ease upward pressure

• Sentiment is bullish after AUD/USD completed a bullish outside day yesterday

• A close above the 21-day MA targets the April 7 trend high at 0.7676

• For more click on FXBUZ

• Flat after closing +0.05%, with the USD broadly softer as range rules

• UK trial on mixing COVID-19 vaccines adds Moderna and Novavax nL8N2M6545

• UK reactive on COVID-19 in 2020, but proactive in 2021 on vaccine rollout

• Charts; mixed momentum studies, 5, 10 & 21 daily moving averages edge lower

• 21 day Bollinger bands slide - modest negative setup above key support

• 1.3670 March/April low, 1.3647 lower 21 day Bolli, 1.3637, 76.4% 2021 rise

• Significant news or a strong USD bounce needed to break 1.3635

• 1.3785 10 DMA has recently capped and is initial resistance

For more click on FXBUZ

• EUR/USD opens 0.30% higher after USD broadly eased with US yields nL1N2M62B3

• EUR/USD resistance at 1.1972 where 50% retracement and 55-day MA converge

• EUR/USD poised to move higher as long as 10-day MA (1.1871) holds on dips

• Buyers tipped at former resistance at 1.1925, with sellers ahead of 1.2000

• Europe's vaccine rollout concerns may casue headwinds after J&J vaccine halt nL4N2M62S2

• For more click on FXBUZ

• AUD/USD opens 0.28% higher after fall in US yields broadly weakened USD nL1N2M62B3nL1N2M61AW

• AUD/USD completed bullish outside day, which portends more gains

• Rally stalled just below the 21-day MA at 0.7653 - which is at 0.7648 today

• More resistance at April 7 high @ 0.7676 and 50% of 0.7849/0.7532 @ 0.7690

• Close support at the 10-day MA @ 0.7633 and break would ease upward pressure

• WP-MI consumer confidence out today, but unlikley to be a market mover

• Key will be moves in Asian equities and US long-dated yields

• For more click on FXBUZ

Credit Suisse discusses CHF outlook and sees a scope for a 2-way risks in the near-term.

"We believe that the SNB sold CHF 583 million worth of FX reserves in February. A small amount compared to a total of CHF 934 billion. However, it appears that the SNB shifted reserves in March as well. These sales should not be seen as a tightening of monetary policy but as an attempt to defuse the tensions with the US in light of the Treasury currency manipulator label," CS notes.

"Nevertheless, we believe this move introduces more two-way risk in EURCHF from here, keeping FX vols supported," CS adds. 

• Techs favor fading a USD/JPY bounce to the daily kijun, now at 109.65

• The kijun is by Tuesday and Monday's 109.75/77 EBS highs

• Eying 1st close below 30-DMA (109.19) since Jan. 22's 103.60 close above

• March's 109 low, 23.6% Fibo of 2021's uptrend & 200-WMA are crucial props

• Clean break below 109 opens a path to the 38.2% Fibo at 107.77

For more click on FXBUZ

• Falling Treasury yields, despite CPI rises, puts USD/JPY at risk

• April's 109 low on 23.6% of 2021 rise, 200-WMA now nearby nL1N2M618Z

• Also threatening 1st sub-30-DMA (109.19) close since Jan. 21's 103.485 one

• A sub-109 close would put in play 108.40 weekly on-close pivot point

• And the 38.2% Fibo of 2021's heady 102.595-110.97 EBS rise at 107.77

• Fed Chair Powell speaking, beige book Wed, but retail sales key Thur

• Bearish bias while below the daily tenkan at 109.925 and 110 supply

• Hefty $6.6bln net spec long looks vulnerable if Tsy yields have topped out

For more click on FXBUZ

• GBP/USD ending NY -0.02% at 1.3744, NorAm range 1.3755-1.3697

• Pair boosted off post-CPI low 1.3697, trades slight 1.3727-45 in NY aft

• Sterling bid intact sub-1.37 after US CPI and vaccine concerns nL1N2M61C6

• Supt holds sub-1.37 for 3rd consecutive day, rallies capped by 10-DMA 1.3784

• Break below Monday's 1.3670 low opens way for retrace to 200-DMA by 1.3342

• Early May cloud twist attracts, bulls need to regain cloud to slow slide

• EUR/GBP climbs higher, +0.22% at 0.8688; Tues range 0.8711-0.8641

• J&J vax issues nL4N2M62S2 tempers UK vax rollout optimism

• EUR gains as recent long unwinds reversed on converging UK-EU growth views

Barclays Research discusses its expectations for today's RBNZ April policy meeting.

"With the RBNZ effectively closing the door to further easing at its February meeting, we expect no change to policy settings. The bank will likely reiterate that policy will remain accommodative given continuing uncertainties," Barclays notes.

"However, we think the bank will also emphasise that it is not looking to normalise policy settings anytime soon. Notably, this will be the first meeting in which the RBNZ will be required to outline the impact of its decisions on house prices," Barclays adds. 

The dollar's bearish reaction to above-forecast U.S. CPI has left it vulnerable, and it could fall to support near its mid-March low of 91.30 if EUR/USD were to clear resistance by 1.1950 and USD/JPY broke key support at 109.

Such dramatic moves might not occur before Thursday's U.S. retail sales report, the next key data on the agenda.

The dollar index has probed below April's prior trough by 92.00 in the wake of the U.S. CPI report nW1N2M6000, which was not sufficiently above forecasts to challenge the assumption that the Fed will keep rates near zero for some time.

Treasury yields had fallen earlier in reaction to J&J's COVID-19 vaccine being put on pause nL1N2M60XL, and slid further after the CPI report.

But EUR/USD's rally has so far held below the 38.2% Fibo of this year's slide at 1.1950 and February's swing low there.
There is more resistance by 1.2000 nL1N2M61CG, but a close above the 1.1950 hurdles would brighten its prospects.

USD/JPY probed below its 30-day moving average at 109.20, with the April low at 109.00 major support tied to the 200-week moving average and the 23.6% Fibo of 2021's rise nL1N2M618Z.

For more click on FXBUZ

Bank of America Global Research discusses the EUR outlook in light of the ongoing acceleration in the vaccination pace in Europe.

"Part of the reason we were bearish EURUSD in the first quarter of the year was the slow start to EU vaccination. However, vaccination in Europe is finally accelerating and the EUR is strengthening again. We argue that for the EUR gains to be sustained, vaccination would have to accelerate fast enough to save at least part of the summer tourist season," BofA notes. 

"Our estimates suggest that while the pace of European vaccination has doubled so far in April, it will have to triple from the March level (US pace), to be able to reopen for the tourist season in July, which is the official target. This is feasible, but not a given. In addition, vaccination passports, which most countries are resisting so far, would help tourism and the EUR, in our view," BofA adds. 

Sterling held firm on Tuesday after finding support during an earlier dip below 1.3700, helped by dollar weakness that appeared to be more driven by the U.S. calling for a pause in the distribution of Johnson and Johnson's COVID vaccine nL4N2M62U9 than unexpectedly strong U.S. CPI.

News that BoE chief economist Andy Haldane would leave the BoE nL8N2M643W this year was also in the mix.

The pound struggled versus the euro, hitting a 6-month low at 0.8711.
Early 2021 GBP, and USD, strength was aided by the successful vaccine rollouts.
The UK was expected to approve the JNJ vaccine shortly and has ordered 30 million doses for summer delivery, Click here .

Tuesday's third consecutive sub-1.37 probe enhances GBP/USD's bearish tone.
With recent recovery attempts shallow, capped by the 10-day moving average at 1.3784 and 10-week moving average at 1.3851, a break below Monday's low at 1.3670 and lower 30-day Bolli at 1.3660 will open the way for tests of 2021 daily lows on the way to 200-DMA support by 1.3342.

GBP/USD bulls must regain the 10-WMA to stem the bearish tide and a rise above the daily cloud top at 1.3942 to regain momentum.
For more click on FXBUZ

MUFG Research sees a scope for EUR outperformance on a brighter vaccination prospects in Europe.

"The chart below highlights a notable acceleration across key EU countries that will greatly improve optimism over a faster pace of vaccination roll-outs. France has seen a pick-up with over 0.5mn vaccines administered on Friday, a one-day record. In Germany on Thursday, 719k vaccines were administered while in Italy the 7-day average of administered vaccines hit 200k for the first time over the weekend," MUFG notes. 

"The higher yields in the US and the evidence of better COVID vaccination roll-outs in Europe may well limited EUR/USD downside. We’d still expect a EUR/USD decline but the euro should outperform other G10 currencies versus the dollar,' MUFG adds.