• NY opened near 0.6445 after 0.6419 traded overnight, rally extended initially

• An early dip towards 0.6435 was bought, AUD/USD rallied above the 200-DMA

• 0.64685 traded as US Treasuries, US$, USD/CNH were sold & gold rallied

• AUD/USD gave back some gains as US$ bounced & equities lifted off their lows

• AUD/USD sat near 0.6450 late, pair traded up +0.41% in NY's afternoon

• Rising daily, monthly RSIs give AUD/USD longs come confidence

• Inability to hold above 200-DMA & rounding top on daily charts worry longs
audusd


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

Synopsis:

'Morgan Stanley forecasts a slight weakening in the euro area PMIs and a modest recovery in the UK, though both economies will likely remain on fragile footing. The Eurozone composite PMI is expected to edge closer to stagnation, while the UK remains in contractionary territory.

Key Points:

• Euro Area:

  • May manufacturing PMIs likely to slip slightly.

  • Composite PMI expected at 50.2, down from 50.4—just above the expansion threshold.

• United Kingdom:

  • Modest PMI rebound expected.

  • Composite PMI forecast at 49.5, still below the 50 mark, indicating continued contraction.

Conclusion:

Both PMIs reflect sluggish underlying economic momentum. The Eurozone clings to flat growth, while the UK struggles to emerge from contraction. Markets may view the UK data slightly more positively if upward momentum is confirmed, but overall risks to growth persist in both regions.

• Offers may emerge near 1.35 if fresh USD selling lifts cable through 1.3469

• 1.35 was 2009 low -- the base level from 1986 until 2016 Brexit referendum

• GBP/USD was last at 1.35 in February 2022 (before Russia invaded Ukraine)

• 1.3469 was 39-month high after hot UK inflation data (released at 0600 GMT)

• British PM Starmer signals U-turn on controversial winter fuel payment cut

• Top U.S. House Republican Johnson tries to mend rifts on Trump tax cut bill

GBPUSD

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

Synopsis:

MUFG highlights that investor hedging dynamics will be a key driver of EUR/USD flows over the near term. While foreign inflows into Eurozone assets have resumed, the differing hedging costs and behaviors between USD- and EUR-based investors may cause asymmetrical FX effects.

Key Points:

• Hedging Incentives Diverge:
  USD-based investors are currently paid to hedge EUR exposure (i.e., positive carry), so they are more likely to hedge Eurozone bond purchases. In contrast, EUR-based investors face negative carry when hedging USD exposure, making them less inclined to hedge US fixed income purchases—leading to greater EUR-selling pressure.

• Equity Flows Less Hedged:
  Equity investments are typically less hedged than fixed income flows. The net equity inflows into the Eurozone are therefore more EUR-supportive compared to fixed income flows.

• Net Impact Still EUR-Positive:
  Despite potential EUR-negative effects from under-hedged USD bond buying, foreign investor return to Eurozone markets—especially equities—supports the EUR in the medium term.

Conclusion:

MUFG expects hedging behavior to amplify short-term EUR/USD volatility, with bond flows more likely to weigh on EUR, while equity flows support it. Overall, the resumption of capital inflows into the Eurozone should remain a structural tailwind for the euro, even if flow asymmetries cause tactical headwinds.

Sterling bulls drove GBP/USD to a 2025 high of 1.3468 following higher-than-expected UK inflation data, but gains were short-lived. A simultaneous rise in gilt and U.S. Treasury yields has reignited concerns about UK fiscal sustainability, pressuring the pound lower.

This mirrors January 2025, when U.S. yields rose on "Trump trades" amid fears that tariff-driven inflation would boost U.S. interest rates. The higher UST yields lifted gilt yields as well, unsettling investors over the UK's ability to fund deficits and maintain budget discipline.

Wednesday's above-target UK inflation data has revived those fiscal worries and tempered expectations for near-term Bank of England rate cuts. LSEG's IRPR now prices in 37 basis points of BoE cuts by December, versus 50 bps from the Federal Reserve. The narrowing rate differential has tempered GBP/USD downside, for now.

The inflation data also casts a light on deep divisions within the BoE Monetary Policy Committee. Any calls for aggressive easing from the doves might fuel further gilt selling if markets believe the BoE is on the cusp of a significant policy mistake. That in turn would heighten pressure on Prime Minister Keir Starmer's government to address mounting fiscal credibility concerns.

Technically, GBP/USD retains a bullish outlook while above 1.3090, the 50% retracement of the 1.2712–1.3468 move. A drop below 1.3090 would bring the daily Ichimoku cloud top near 1.3000 and the 200-day moving average at 1.2889 into focus.
GBP Chart:


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

Synopsis:

Goldman Sachs sees scope for continued gains in GBP, supported by improving UK data surprises, growing domestic confidence, and a relatively hawkish BoE stance. While some soft spots remain in the labor data, the broader macro backdrop is turning more Sterling-supportive.

Key Points:

• UK Data Surprises Turn Positive:
  Goldman’s proprietary data surprise index for the UK has shifted into positive territory since March, helped by strong Q1 GDP figures.

• BoE Hawkishness Helps Sentiment:
  A relatively hawkish tone from the Bank of England is adding to bullish GBP sentiment, especially when compared to other cyclical G10 currencies.

• Sterling Positioning Builds:
  Investor positioning in GBP is now longer than in NOK, SEK, CAD, AUD, and NZD—reflecting increasing confidence.

• Mixed Labor Market Signals:
  Although HMRC payroll data indicates some jobs stagnation, Goldman remains constructive overall, seeing it as a soft patch rather than a structural problem.

• Global Risk Backdrop Supportive:
  A broader improvement in global risk sentiment is also aiding Sterling. However, Goldman notes that the drop in EUR/GBP has likely overshot model-based expectations, which may limit further downside.

Conclusion:

Goldman maintains a constructive outlook on GBP, citing a combination of better UK macro data, hawkish central bank tone, and supportive global risk dynamics. While EUR/GBP may be near technical support, overall GBP upside remains justified in the short to medium term.

• EUR/USD rallied through the 21-DMA, 1.1280/1.1300 resistance zone overnight

• Pair traded 1.1282-1.1362 on EBS, NY opened near 1.1340, pair up +0.50% early NY

• US asset selling helped drive EUR/USD to a 10-session high

• Treasuries , US$, USD/CNH sales & gold gains helped buoy

• Techs lean bullish; daily RSI is rising, pair trades above the 10- & 21-DMAs

• May's monthly long legged doji candle reinforces the bullish tech signals
eurusd


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

• AUD/USD rallied 0.6419-0.6458 overnight, NY opened near 0.6445, pair up +0.33%

• Pair held within its consolidation range however even as US assets were shunned

• US Treasuries , US$, USD/CNH were sold while gold was bought

• AUD/JPY's drop below 92.50 helped AUD/USD fall back below the 200-DMA

• Techs are a bit mixed; daily, monthly RSIs rising but rounding top pattern on daily chart

• AUD/USD's inability to maintain upward momentum above 200-DMA may worry longs
audusd


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

• Options charge a premium for strikes in the most vulnerable FX direction

• The direction which is expected to see increased volatility/option demand

• This premium has seen a big increase for USD puts over calls across G10 FX

• AUD/USD is no exception, although it retains a USD call/AUD put premium

• That downside strike risk premium falls to 7-year lows, last seen March 2024

• Even more significant is that it had spiked to 5 year highs in early April
AUD/USD FXO 25 delta risk reversals

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

Level Technical Significance

146.08 Daily High May 16

145.75 Daily High May 19

145.69 Daily Cloud Base

145.51 Daily High May 20

143.79 ==Update Price==

143.45 Daily Low May 8

142.45 Daily Low May 7

142.36 Daily Low May 6

141.97 Daily Low Apr 29

Strategy Sell @ 146.05

Current Position Flat @ 154.30

Target: Stop:

Open/Close 03-Feb-25

The thick daily cloud, that currently spans the 145.69-148.58 region, has limited USD/JPY's upside. Spot has slipped below the broken kijun line, currently at 144.27, the midpoint of the last twenty-six trading sessions. A daily close below the kijun line would add significantly to the downside risk. Previous . A combination of pressures hint at a bigger USD slump

Daily Chart:

(Martin Miller is a Reuters market analyst. The views expressed are his own)

• The 100-DMA at 1.0790 is set to cross above the 200-DMA at 1.0799

• Regardless G7 policy signal will fuel already bullish sentiment

• Ahead meeting EUR/USD rally likely to falter

• Unprecedented surplus can support much higher euro

•
EURUSD

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

• EUR rises to 1.1281-1.1348 EBS on Wednesday

• Rally stretched toward top of the 20-month Bollinger bands at 1.1361

• The 61.8% retracement of Apr-May 1.1573-1.1065 drop is 1.1379

• Traders are hoping G7 will provide rally with more impetus

• Conditions favourable for carry trades emerging which will weigh EUR/USD

•
EURUSD monthly chart

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

• Cable rises to 1.3458 on hotter than expected UK April inflation data

• CPI up 3.5% YY vs 3.3% f/c, 15-month high. Services CPI 5.4% YY vs 4.8% f/c

• 1.3458 is highest level since Feb 2022. 1.3438 was Asia high (pre-UK CPI)

• Asian gains spurred by USD selling on Trump tax-cut bill and G7 event risks

• Hot UK inflation data is boost for hawks opposed to BoE rate cut in August

• 1.3400 (ex-resistance) is now a GBP/USD support point (1.3403 = Monday high)

GBPUSD

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

• USD remained on the back in Asia across the board, USD/JPY again hit hard

• From 144.23 early Asia through 144.00 to 143.85 EBS, more weakness in store?

• USD/JPY now lowest since 143.45 on May 8, heading for 142.36 trough May 6?

• USD/JPY tracking daily Ichi cloud down since break into cloud, 148.65 May 12

• Cloud between 145.68-148.57 today, spot now also below 144.26 Ichimoku kijun

• Nearby option expiries today 143.00 $489 mln, 143.25 $300 mln

• Upside 143.95-144.00 $681 mln, 144.20-30 $480, 144.50 $940 left in dust

• Spike higher in super-long JGB yields making JGBs more attractive?

• JPY crosses mostly range-bound with USD weaker against EUR, GBP, AUD

• EUR/JPY 162.86-163.06 EBS, GBP/JPY 193.00-61, AUD/JPY 92.52-90

• AUD/JPY weaker than other pairs post-RBA OCR cut yesterday, more to come

• Related comment , also , on EUR/JPY

• On Japan data/confidence , for more click on [FXBUZ]

USD/JPY hourly:


EUR/JPY hourly:


AUD/JPY hourly:

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

• +0.1%, above the often pivotal 1.1279 21 DMA - close above would be bullish

• US intel suggests Israel preparing strike on Iran's nuclear facilities, CNN

• If true, a major escalation of the Middle Eastern conflict - Brent +1.15%

• EU, Britain go ahead with new Russia sanctions without waiting for Trump

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

• Daily momentum studies base/rise - daily charts show no strong bias

• Friday's 1.1131 low, then 1.1053 0.618% Mar/Apr rise are initial supports

• The May 1.1380 high, then the 1.1425 April 28th top, next resistance levels

• 1.1265/70 1.746 BLN, 1.1300/05 1.786 BLN close May 21 strikes may contain
Andy

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

• USD/CNH gravitates lower to 7.2095 from open 7.2145

• Tues rejection by 200 DMA weighs on weak long positions

• Wed close below 7.2012 engages Bollinger downtrend channel

• USD/JPY falling again; steady decline drags USD/AXJ down

• PBOC fix might however rise, prop up USD/CNH

• China stocks eyed following successful CATL HK debut
CNH:

(Ewen Chew is a Reuters market analyst. The views expressed are his own.)

• +0.05% in early Asia after closing up 0.2%, with the U.S. dollar off 0.4%

• UK employer pay rises are steady at 3%, as soft signs grow - Brightmine says

• Pay rises are a key indicator of the Bank of England's interest rate policy

• EU, Britain go ahead with new Russia sanctions without waiting for Trump

• A tight sterling range is likely in Asia ahead of key CPI inflation data

• Charts - 5, 10, & 21-day moving averages, momentum studies base or rise

• 21-day Bollinger bands expand - modest positive setup at recent range high's

• Trading the six-week 1.3165/1.3445 range with tight stops makes sense

• May 1.3402 top under pressure, 1.3440 upper 21-day Bollinger next resistance

• Friday's 1.3251 low then 1.3165, 0.382% of the April rise are first supports
Andy

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

• Steady after closing up 0.35% with the U.S. dollar off 0.4%

• EU, Britain go ahead with new Russia sanctions without waiting for Trump

• EU budget must adapt to geopolitical, climate, tech changes - von der Leyen

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

• Daily momentum studies base/rise - daily charts show no strong bias

• Friday's 1.1131 low, then 1.1053 0.618% Mar/Apr rise are initial supports

• Under pressure, 1.1284 21 DMA and the 1.1380 May 6 top first resistance

• A close above the often pivotal 1.1284 21-DMA would be a bullish signal

• 1.1250 2.026BLN, 1.1265/70 1.746BLN, 1.1300/05 1.786BLN close May 21 strikes
Andy

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

• AUD/USD hit 0.6392 low Tue following RBA's dovish tone around its OCR cut

• The pair has since recovered 0.5% as the wider USD weakness theme returns

• President Trump struggling to get major tax bill through Congress

• Fed officials Hammack/Musalem say likely trade war outcome is stagflation

• Early hopes for unconditional Russia/Ukraine 30-day ceasefire dissipate

• AUD crosses above 20-DMA, bid short-term, likely to fade near 0.6452 200-DMA

• Overnight range 0.6392-0.6426, support 0.6390 0.6355, resistance 0.6550
AUD Hourly Bollinger Study


AUD Daily 200-DMA

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

Synopsis:

Danske Bank has delayed its Fed rate cut forecast from June to September 2025 due to a more front-loaded fiscal stimulus outlook, but maintains a bearish stance on EUR/USD, citing macro and structural factors outweighing Fed repricing in FX dynamics.

Key Points:

• Fed Call Shifted to September:
  Danske now sees the first Fed cut in September 2025, instead of June, reflecting a fiscally expansionary tilt from Q1 2026.

• Terminal Rate Unchanged:
  Despite the delay, Danske maintains its terminal Fed Funds rate forecast of 3.00–3.25% by September 2026.

• US Fiscal Outlook Turning Looser:
  The updated budget reconciliation bill implies larger near-term deficits, with federal budget shortfalls potentially reaching 7.0% of GDP in 2026–2027 after a brief tariff-induced tightening phase.

• FX Market Focus Has Shifted:
  Danske notes the USD’s sensitivity to Fed pricing has declined, with macroeconomic divergences and structural imbalances now more critical to EUR/USD pricing.

• EUR/USD Outlook Unchanged:
  Danske maintains a bearish view on the euro and holds its 12-month EUR/USD target at 1.20, despite the revised Fed timeline.

Conclusion:

While Danske delays its expected Fed rate cut to September, it keeps its broader FX outlook intact, arguing that EUR/USD trajectory is now more tied to structural headwinds than to incremental shifts in Fed policy expectations.

• USD/JPY stay defensive as risk tone sours amid US budget uncertainty

• Slips to lower end of day's EBS range of 144.10-145.51 as US shares, 2-yr yields ease

• G7 commences; markets await Fin Min Kato meeting with Trsy Sectry Bessent

• Japan trade negotiator Akazara set to meet US counterpart Friday: Nikkei

• Pair settles near middle of 21-day Bollinger; large 145 Friday expiries may cap

• Resist: 145.36 9-day EMA; 146.05 conversion line; 146.14 cloud bottom

• Supp: 144.27-47 base line an 21-DMA, 144.00 May 7 high

• AUD/JPY stays under pressure; tests 21-DMA and 55-DMA
Yen


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

• NY opened near 0.6415 after 0.6459 traded overnight, bears held control in early trading

• Firmer US yields, US$ & AUD/JPY drop helped AUD/USD hit 0.6392; buyers emerged

• US$ softened, USD/CNH erased most gains; copper bounced up & gold traded up +1.73%

• AUD/USD climbed back above the 10- & 21-DMAs, neared 0.6420, was down -0.57% late

• Hold below 200-DMA & falling daily RSI give techs a bearish lean

• Rounding top pattern on daily charts & May's monthly doji candle reinforce bearish signs
audusd


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

Synopsis:

Despite the Australian dollar's drop after the RBA’s dovish 25bp rate cut and lowered growth forecasts, HSBC maintains a bullish AUD/USD outlook, citing macro and flow-related tailwinds that could lift the currency in the medium term.

Key Points:

1. Fiscal Cushion:
   The Australian government retains ample fiscal space and willingness to deploy supportive stimulus if domestic conditions weaken.

2. Trade Tension Relief:
   The recent de-escalation in global trade tensions, particularly US-China, bodes well for Asia-Pacific growth and global risk sentiment—both positive for AUD.

3. Rising Hedge Ratios:
   With lower FX hedging costs, Australian superannuation funds may boost hedges on foreign equity holdings, leading to AUD inflows.

4. Positioning and Valuation:
   CFTC data shows AUD remains a crowded short, while HSBC’s models suggest the currency screens cheap, creating favorable risk-reward for a rebound.

Conclusion:

While the RBA’s dovish stance weighs near-term, HSBC sees structural and positioning dynamics that favor AUD/USD upside—especially as risk appetite improves and fiscal/portfolio flows turn supportive.

• EUR/GBP remains anchored to 0.84 as pullback looks to have run its course

• Wednesday's UK CPI is a potential needle mover for GBP

• One-time effects, hawkish BoE pricing suggests GBP risks are asymmetrical

• Thus a soft print is likely to matter more than a hot release

• For EUR/GBP, this opens the door for a rebound towards 0.8500

• Support = 0.8388/0.8400 (200DMA). Resistance = 0.8450/73 and 0.8500
EURGBP daily chart

(Justin McQueen is a Reuters market analyst. The views expressed are his own.)