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EUR / USD
GBP / USD
USD / JPY
USD / CAD
AUD / USD
NZD / USD
USD / CHF
AUD / JPY
AUD / NZD
EUR / CHF
EUR / GBP
EUR / JPY
GBP / JPY
By Randolph Donney  —  Feb 27 - 02:50 PM
  • USD/JPY pulled back almost to 2024's up TL with a 150.08 low

  • Low just above our bid at 150.05

  • Well off the lows since but still below Feb's 2024 peak at 150.88

  • Uptrend from Feb's 145.90 swing low intact with closes above 2024's up TL

  • The daily tenkan at 150.17 is also pivotal on a closing basis

  • Broader bull target is 2023/22's 151.92/94 peaks

  • That after clearing 76.4% of Nov-Dec 151.92-140.27 drop at 149.17

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Randolph Donney  —  Feb 27 - 02:25 PM
  • EUR/USD makes 5th straight higher daily low after gaining tenkan support

  • But prices are still below Feb. 22/2 peaks at 1.0889/97

  • Those are by 61.8% of the 1.1000-0695 drop & 55-DMA at 1.0883/87

  • Tenkan at 1.0807 is rising toward the kijun at 1.08135

  • A cross above the kijun would eye daily cloud twist & upcoming 1.0932 top

  • That top is also 76.4% of the 1.1000-0695 drop

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 27 - 01:30 PM

Synopsis:

HSBC reaffirms its position on shorting EUR/JPY in anticipation of the Bank of Japan's (BoJ) March meeting, driven by recent CPI data that surpassed expectations. Japan's CPI for January indicated a significant rise, bolstering market expectations that the BoJ may soon end its Yield Curve Control policy and exit its ultra-accommodative stance. This analysis is based on the stronger-than-expected inflation figures and their implications for monetary policy and currency strength.

Key Insights:

  • Inflation Surprises: Japan's CPI increased by 2.2% YoY in January, outperforming the consensus forecast of 1.9%. The core component, excluding fresh food, also exceeded expectations, hinting at an economy where firms are successfully passing on higher costs.

  • Market Reactions: The unexpected inflation data prompted a sharp increase in the yield of the 2-year Japanese government bond, reaching its highest level since 2011, and contributed to a strengthening of the JPY.

  • JPY Valuation: Despite the anticipation of a policy shift, the JPY remains undervalued relative to rate differentials, presenting an opportunity for strength, particularly against the EUR.

  • BoJ Policy Expectations: Although the consensus expects the BoJ to exit negative interest rates by April, such a move would represent a significant shift in policy direction, reinforcing HSBC's strategy to maintain a short position on EUR/JPY.

Conclusion:

HSBC's analysis suggests that the recent inflation data from Japan not only underscores the potential for a pivotal policy shift by the BoJ but also highlights an opportunity for JPY appreciation. The bank's continued recommendation to short EUR/JPY is predicated on the expectation of further JPY strength as the market anticipates the end of the BoJ's ultra-accommodative monetary policy. This position aligns with the observed market dynamics following the release of the inflation report, suggesting a strategic play for investors in the currency markets.

Source:
HSBC Research/Market Commentary
By Justin Mcqueen  —  Feb 27 - 11:45 AM

Narrow ranges prevail across the major G10 currencies with EUR/USD trading within the parameters set by the 200 and 55-DMAs (1.0828-1.0887).
Limited rate divergence and muted volatility has kept FX rather subdued.
Thus, market attention now rests on the upcoming euro area inflation readings and the U.S. core PCE figures to potentially spark some life into the FX market.

This week’s euro area inflation report will be particularly noteworthy given that this will set the tone for the European Central Bank’s March meeting.
The recent rhetoric from policymakers has been about leaning against market pricing which had signalled pre-June rate cuts.

Consequently, year-end pricing shows 88bps of easing, down from 158bps at the beginning of the month 0#ECBWATCH.
Meanwhile, the probability of an April cut is at 35% (or 8.6bps).
What’s more, given the move higher in EUR/USD from 1.07 to the mid-1.08s, risks are beginning to look asymmetrical, whereby a downside CPI surprise prompts a larger market reaction than a hotter than expected print.

Should euro zone CPI miss expectations, this would likely open the door for the single currency to retest the February trough at the 1.07 handle.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 27 - 10:45 AM

Synopsis:

Credit Agricole's recent analysis leverages their month-end fixing model to anticipate moderate USD selling across various currency pairs, with a particular focus on long AUD/USD and short USD/CAD positions as we approach the month's end. This projection is informed by the performance of global equity markets in February and the observed strength of the USD throughout the month.

Key Insights:

  • Global Equity Performance: The analysis underscores that global equity markets have shown positive momentum in February, which plays a crucial role in the month-end fixing model and its implications for currency market movements.

  • USD Dynamics: Despite the broader firmness in equity markets, the USD has maintained strength across the board over the month. This dynamic sets the stage for the predicted currency flows.

  • Model Predictions: Credit Agricole's fixing model, which considers adjustments for market capitalization and FX performance during the month, suggests that there will be moderate USD selling. This outlook is based on the alignment of portfolio rebalancing flows at the month's end.

  • Specific Currency Signals: The strongest signals identified by the model are for long positions in AUD/USD and short positions in USD/CAD. These findings highlight where the most significant movements are expected, according to the predicted USD selling pressure.

Conclusion:

Credit Agricole's analysis provides insightful predictions on moderate USD selling across the board, with a spotlight on AUD/USD and USD/CAD as the currency pairs to watch. This forecast, grounded in the interplay between February's equity market trends and the USD's performance, offers valuable guidance for investors and traders looking to adjust their strategies in anticipation of these expected market shifts. The analysis not only identifies potential currency movements but also emphasizes the importance of considering global equity performance and FX dynamics in month-end portfolio rebalancing decisions.

Source:
Crédit Agricole Research/Market Commentary
By Justin Mcqueen  —  Feb 27 - 09:35 AM
  • Focus on US PCE and EZ CPI data keeps EUR/USD range tight (1.0842-66)

  • Potential USD upside into Ldn fix amid corporate month-end nL2N3FB0OI

  • Puts initial focus onto support at 1.0828 (200DMA), 1.0817 (100DMA)

  • Break below 100DMA opens door to 1.08

  • M3 data suggests more or sooner easing that may weigh euro nL2N3FC1FK

  • 55DMA & Feb highs at 1.0886-97 remain a hurdle

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 27 - 09:30 AM

Synopsis:

Societe Generale (SocGen) discusses the recent dynamics in Japan's inflation rates and its impact on monetary policy, particularly focusing on the implications for the Nikkei Index (NKY) and the USD/JPY currency pair. The "core-core" inflation rate in Japan has settled at 2.2%, prompting debates on the future of negative interest rate policies and yield curve control. The depreciation of the yen since the Covid pandemic onset and its near record-high against the USD are also highlighted as critical factors influencing policy decisions.

Key Insights:

  • Japan's "core-core" inflation rate stabilization at 2.2% may signal the end of negative interest rate policies and yield curve control sooner than anticipated.
  • The significant depreciation of the yen and its position near post-1990 highs against the USD underscore the urgency for policy adjustments.
  • Historical USD/JPY movements indicate potential for drastic fluctuations, recalling its drop from above 160 in April 1990 to under 80 by 1995.
  • Current futures trading shows a predominant short position on the yen, ahead of a crucial Bank of Japan (BoJ) meeting that could mark the beginning of policy divergence reversal with the US.
  • SocGen favors the view that an imminent shift in BoJ policy, possibly preceding a Fed policy change, could signal a turning point for USD/JPY, opposing the consensus short position on the yen.

Conclusion:

SocGen's analysis suggests that Japan's inflation dynamics and the depreciating yen are nudging the BoJ towards a pivotal policy shift. The anticipation of this shift, especially in the context of a significant USD/JPY currency pair fluctuation history, has crucial implications for traders and the broader financial market. With a critical BoJ meeting on the horizon, SocGen posits that the prevailing short yen positions might be misguided, expecting a potential reversal in USD/JPY trends as a result of changing monetary policies in Japan and possibly in the US later in the year.

Source:
Société Générale Research/Market Commentary
By eFXdata  —  Feb 27 - 08:37 AM

Synopsis:

MUFG forecasts a potential shift in the Bank of Japan's (BoJ) monetary policy, suggesting a move away from negative interest rates as early as the upcoming March meeting. This speculation is fueled by rising short-term interest rates in Japan, with the yield on 2-year Japanese Government Bonds (JGB) reaching its highest level since 2011. Key factors influencing this outlook include stronger confidence in wage increases within Japan and concerns over a weakening yen.

Key Insights:

  • Short-term interest rates in Japan are on the rise, with significant speculation about impending BoJ rate hikes.
  • The yield on 2-year JGBs has hit a peak not seen since mid-2011, indicating market anticipation of policy shifts.
  • Increasing confidence in wage growth and the negative impact of a weakening yen on the economy are pivotal to the BoJ's rate hike considerations.
  • Leveraged funds have notably increased short positions on the yen, reflecting market expectations for further weakening.

Conclusion:

MUFG's analysis points to a significant policy pivot by the BoJ in the near future, potentially as soon as the March meeting, marking a departure from negative interest rates. This anticipated move is seen as a response to internal economic factors, including wage trends and currency valuation concerns, as well as market dynamics such as the growth in yen-funded carry trades. An early rate hike could aim to stabilize the yen and adjust Japan's monetary stance in response to evolving economic conditions.

Source:
MUFG Research/Market Commentary
By Justin Mcqueen  —  Feb 27 - 07:35 AM
  • AUD/USD bounces off initial support at 0.6525 (Dec/Jan lows)

  • Move higher underpinned by cross-related AUD/NZD buying ahead of RBNZ

  • However, the 200DMA (0.6563) remains a challenge for longs

  • Yuan also signals a limit to how much AUD can rise from here

  • Key focus for bulls is a daily close above the 200DMA to open up 0.66

  • Failure to do so will keep shorts in control

  • AU event risk - monthly CPI. Weighted CPI f/c 3.6% from 3.4%

  • RBNZ Preview nL2N3FC0PJ

  • NZD/USD net longs at a 1yr high nL2N3FB1I8

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Feb 27 - 05:50 AM
  • EUR/USD has been rangebound for more than one-year

  • Pair has recently returned to middle of ranges

  • Mid-point of widest traded is 1.0862, centre 20-week Bollinger Bands 1.0900

  • No change in rates differentials slightly favouring USD seen this year

  • It's getting quieter so traders paring bets on bigger movement nL2N3FC0T5

  • Longs and rate differentials continue to weigh - deeper fall may result

  • While risks lie lower - break from 1.04-1.11 is not likely

  • Counter trading moves toward 1.05 or 1.10 may be popular

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Feb 27 - 05:30 AM
  • 0.6550 option expiry exerts magnetism over AUD/USD following drop to 0.6525

  • The 0.6550 strike rolls off at 10am ET. 0.6525 was one-week low in Asia

  • Iron ore rebound supports AUD (iron ore is big export earner for Australia)

  • China wine dispute may be resolved within weeks, Aussie trade minister says

  • Australia Jan inflation data due 0030 GMT; weighed CPI forecast at 3.6% YY

  • AUD/NZD might jump through 1.07 if RBNZ keeps OCR unchanged at 0100 GMT

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Feb 27 - 04:30 AM
  • Yen has firmed after consumer inflation data topped estimates nL2N3FC0EP

  • Markets expect BOJ to end negative rates in March or April nL3N3FB4P5

  • USD/JPY has dropped from 150.69 to 150.12, on Tuesday, EBS data shows

  • However USD/JPY still has scope bounce back to 2023/2022 peaks nL2N3FC0IX

  • A daily close under daily tenkan line, now at 150.17, would be negative

  • N.B. USD/JPY and EUR/JPY pairs currently have a strong positive correlation

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Feb 27 - 02:55 AM
  • USD/JPY has scope for bigger gains to test 2023/2022 151.92/94 peaks

  • That after remaining above broken 149.17 Fibo for thirteen days in a row

  • 149.17 Fibo is a 76.4% retrace of the (Nov-Dec) 151.92-140.27 (EBS) drop

  • Fourteen-day momentum remains positive, reinforcing the overall bull market

  • As does the positive alignment of the daily tenkan and kijun lines

  • EUR/JPY has seen a 163.25-163.39 range, on Tuesday, EBS data shows

  • USD/JPY Trader TGM2336. Bid at 150.05. Previous update nL2N3FB0EZ

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Feb 27 - 02:50 AM
  • Cable has traded a 20.5 pip range thus far Tuesday; 1.2695 = intra-day high

  • Tuesday range-to-date tighter than Monday, which was tighter than Friday

  • Friday range was tighter than Thursday. Sterling volatility hits 4-year low

  • 1.2700-10 is GBP/USD resistance window (1.2710 was three-week high Thursday)

  • UK should resist tax cuts without detailing spending pain, IFS says

  • BRC says UK shop price inflation falls to 2.5%, lowest since March 2022

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Feb 27 - 02:15 AM
  • EUR/USD daily "cloud twist", circa 1.0930 on Friday, could attract spot

  • Cloud twist is when the cloud extremes, senkou spans A and B, cross

  • Recently spot failed under the 1.0712 Fibo, setting up a "bear trap"

  • 1.0712 Fibo is a 61.8% retrace of the 1.0448-1.1139 (Oct to Dec) EBS rise

  • Bear trap: when spot breaks below a tech level but reverses and is bullish

  • However a big upper shadow on last Thursday's candle = an upside rejection

  • EUR/USD Trader TGM2334. Previous update nL2N3FB0DZ

  • Could dollar longs be set for some pain? nL2N3FA0ER

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Feb 27 - 01:30 AM
  • Bull pressure is building but the daily cloud top is resisting

  • We remain short from 1.2704 but the trade is in trouble

  • Pullbacks from the cloud have been limited

  • Daily momentum is positive but RSI has turned lower

  • A Mar. 11 1.2649-63 cloud twist is fighting our corner

  • However, a close above the cloud would open up the Feb. 2 high at 1.2772

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Feb 26 - 10:15 PM
  • EUR/USD opened +0.27% at 1.0850 and traded in a 1.0846/52 range

  • Interest limited as market looks ahead to US & EZ inflation data Thurs/Fri

  • EUR/USD forming trend higher as 5, 10 & 21-day MAs in a bullish alignment nL2N3FC03K

  • Resistance is at 1.0885/90 where the 55-day MA and Feb 22 high reside

  • Support is at the 10-day MA at 1.0803 and break would ease upward pressure

  • Bias is for buying dips while 1.0800 holds

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Feb 26 - 10:00 PM
  • AUD/USD opened -0.35% at 0.6540 after risk currencies underperformed

  • It continued to decline in Asia as risk assets came under some pressure nL3N3FB56F

  • Dalian iron ore fell close to 1.0% while the AXJ index fell 0.55%

  • AUD/USD traded down to 0.6525 and was near session low into the afternoon

  • It is now below the 10-day MA at 0.6538 and 21-day MA at 0.6531

  • A close below 0.6530 would increase downward pressure

  • Bids are tipped around 0.6500 with 61.8 of recent decline at 0.6501

  • Action likely to pick up Wednesday when RBNZ decides and monthly Aus CPI due

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Feb 26 - 06:55 PM
  • EUR/USD opens +0.27% after rise in EZ yields underpinned nL2N3FB1N6

  • Trend higher forming as 5, 10 & 21-day MAs in a bullish alignment

  • Resistance is at 1.0885/90 where the 55-day MA and Feb 22 high converge

  • A break above 1.0900 would suggest a bottom is in place at 1.0695

  • Support is at the 10-day MA at 1.0803 and break ease upward momentum

  • EUR/USD may pause ahead of Key US and EZ data out Thursday and Friday

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Feb 26 - 06:40 PM
  • Steady into the CPI - headline Core CPI y/y +2.0% against 1.8% expected

  • Overall +3.5% against 3.7% expected, Ex food and Energy +3.5% v's 3.7%

  • Muted initial response from USD/JPY which trades down 0.1% at 150.56

  • 151.92 2022 and 2023 high remains a potential BOJ intervention level

  • USD/JPY has been on hold in a 149.51/150.88 range for the last two weeks

  • 5, 10 & 21-day moving averages trend higher - positive signals

  • The 150.17 Tenkan line is initial support, then the 148.39 Kijun line

  • New York's 150.54-150.83 range is initial support and resistance

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Feb 26 - 06:05 PM
  • AUD/USD opens -0.35% after risk currencies fell against USD and EUR

  • Sluggish equity market, higher US yields and weaker iron ore weighed on AUD nL2N3FB2SFnL2N3FB246nL3N3FB0LU

  • Volumes were light ahead of Aus CPI and RBNZ decision Wednesday

  • AUD/USD managed to hold above support at the 10-day MA (0.6530 Monday)

  • It rises to 0.6539 today and close below would be bearish

  • Resistance is at last week's 0.6595 high where selling is tipped

  • Key in Asia will be moves in equities and Dalian iron ore

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 26 - 04:30 PM

Synopsis:

Danske Bank emphasizes a cautious approach towards EUR/USD, suggesting selling on rallies in anticipation of key data releases and central bank commentary this week. The focus will be on the US PCE price index and the ISM Manufacturing PMI, alongside European inflation figures. Expectations of core PCE inflation doubling in January may influence the Fed's stance, while softer inflation in the euro area could heighten expectations for an ECB rate cut in April.

Key Insights:

  • The week's key economic data include the US PCE price index and ISM Manufacturing PMI, along with European inflation figures.
  • Core PCE inflation in the US is expected to rise, potentially reinforcing a cautious Fed approach.
  • Softer European inflation could lead to increased speculation about an early ECB rate cut, pressuring EUR/USD.

Conclusion:

Amidst the backdrop of diverging monetary policy expectations between the ECB and the Fed, Danske Bank advises a strategy of selling EUR/USD on rallies. The bank anticipates that the currency pair's near-term direction will be influenced by inflation data and central bank rhetoric. A stronger USD is favored due to the ongoing monetary policy divergence, underscoring the cautious stance towards EUR/USD in the current market environment.

Source:
Danske Research/Market Commentary
By Randolph Donney  —  Feb 26 - 02:45 PM
  • USD/JPY uptrend is back up by 2024's 150.88 high on EBS

  • Mon's 150.30 low is above the prior dn TL off the 150.88 Feb. 13 high

  • And above the rising daily tenkan line at 150.17

  • 2024's up TL meets the cleared dn TL on Wed at 150.05-11

  • Rising lower 10-d Bolli is also supports 2024's up TL

  • A close above 150.88 would put in play 2023/22's 151.92/94 peaks

  • That would complete the retracement of the Nov-Dec 151.92-140.27 drop

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Randolph Donney  —  Feb 26 - 01:35 PM

The dollar index fell 0.1%, led lower by gains in EUR/USD, its primary component, ahead of key U.S. and euro zone inflation data late this week that could indicate whether the tightening of bund-Treasury yields spreads since mid-month will persist.

The dollar rose against the low-yielding yen and risk proxies such as the Australian dollar and yuan as the markets guess whether the delaying and nearly halving of expected 2024 Fed rate cuts since earlier this year, and particularly after January's febrile jobs report and above-forecast inflation updates, reached an apex last week.

Thursday's core PCE reading, along with February ISMs and the March 8 employment report, are eagerly awaited to settle the Fed policy debate.
As it stands, forecasts for the U.S. data, if met, ought not cause faster pricing in of Fed cuts and a weaker dollar.

But the longer rates remain elevated and equity markets remain driven to new peaks on the back of a select few stocks, the greater the fear that U.S. economic data will begin disappointing instead of beating expectations.

Currently, futures put the probability of a first Fed cut in June at only 60%, with less than 80bp of cuts by year's end, essentially matching the December Fed's 75bp dot plots.

Euro zone governments' CPI data is also due on Thursday, and the euro zone readings on Friday, with overall and core year-on-year forecast at 2.5% and 2.9% versus 2.8% and 3.3% in December.

The ECB's first rate cut is fully priced in for its June 6 meeting, six day's before the Fed meeting, with 88bp of cuts by year-end.

European Central Bank President Christine Lagarde reiterated on Monday that wage growth remains robust, though firms may be absorbing some of the increase via lower profits.
ECB speakers of late, along with those from the Fed, have pushed back on rapid rate cut pricing, but the ECB may also not want to beat the Fed in a June race to cut rates.

Japan's core CPI on Tuesday is forecast at 1.8% from 2.3% in December, adding to recessionary data that suggest an expected 10bp BoJ hike by April or June is less needed and USD/JPY's rise, Monday up 0.16%, toward 2023/22's 32-year peaks at 151.92/94 is to persist unless U.S. data weaken.

Sterling shed earlier gains, again finding sellers by the 61.8% Fibo of the December-February pullback and cloud top above 1.27.
Only 61bp of 2024 BoE cuts are priced in.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
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