• EUR/USD 0.31%, USD/JPY -2.26%, GBP/USD 0.41%, AUD/USD 0.7%

• S&P E-minis 0.37%, DAX 0.63%, Nikkei 225 -1.06%, FTSE 1.33%

• EUR/USD drops under big level as oil rockets to $126 per barrel

• USD/JPY falls from new 2026 peak as intervention worries bite

• GBP/USD weighed down by hawkish Fed, higher oil; BoE ahead

• AUD/USD respects 0.71 support level

• Option expiries . U.S. Open
(Martin Miller is a Reuters market analyst. The views expressed are his own)

(added missing word to title)

• USD climbed to a new 2026 peak versus the yen, Japan issued a new warning

• USD/JPY hit a 160.72 high in London, before dropping to 159.18, EBS data shows

• Yen neared intervention levels, keeping traders on edge

• Fin Min Katayama: the timing to take "decisive" action in the market was nearing

• The fourteen-week momentum reading suggests the underlying USD/JPY is positive

• 30-day log correlation between USD/JPY and EUR/JPY is well below +0.5 (relationship broken)

Daily Chart


Weekly Chart


Correlation Chart


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

Oil is pushing higher amid fears of fresh Middle East escalation, adding a new layer of downside risk to EUR/USD and reviving demand for protection. FX options markets have already reacted. One-month implied volatility slumped to 5.50 this week, retracing all of its conflict-driven gains to hit its lowest since the fighting began, before rebounding sharply to 5.95 as fresh demand kicked in. One-month risk reversals have extended their recovery to 0.45 EUR puts over calls, reflecting additional risk premium for downside strikes over upside.

Yet EUR/USD's actual downside during the conflict has remained surprisingly contained — and that is the key to this trade.

That dynamic favours the EUR put Reverse-Knock-Out, or RKO — a structure that has been a go-to hedge since the conflict began and remains well-suited to the current environment.

While a vanilla EUR put gives the holder the right to sell EUR/USD at a set strike, adding a trigger below converts it into an RKO. The option remains live unless spot touches the trigger before expiry, at which point it expires worthless.

That knock-out risk is what makes it cheap — and crucially, pricing models assign a higher knock-out probability precisely because the downside volatility skew runs in the same direction as the strike, compressing the premium further.

The result is a structure that offers meaningful downside protection at a fraction of vanilla cost — ideal for those who fear escalation but expect EUR/USD declines to remain limited in scope.

With volatility rebounding, risk reversals skewed for puts and spot resilient, the RKO remains one of the most efficient ways to hedge EUR/USD tail risk right now.
EUR=EBS


EUR/USD FXO implied volatility


EURUSD RISK REVERSALS


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

(Adds link to option expiry calendar on line 4 )

• The cash hedging of huge, soon-to-expire FX options have been keeping a stranglehold on EUR/USD this week

• Billions in expiries anchored EUR/USD near 1.1700 through Monday, Tuesday and Wednesday's New York cuts

• EUR/USD mildly weaker since hawkish Fed and higher oil, but more expiries Thursday maybe limiting deeper FX declines

• There are EUR 1-billion at 1.1675, EUR 1.1 billion at 1.1690-1.1700 and 1.5 billion at 1.1725 for the 10-am New York cut

• However, the 1.1700 gravitational centre fades after Thursday's cut as the last of the big strikes roll off

• Friday brings fresh anchor points — 2.5bln euros expire 1.1640-50 which may underpin any deeper EUR/USD declines short term

• Related - FX options wake up to escalating war risks
EUR/USD FX option strike expiries April 27 - May 1


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

• USD/JPY spot smashed above 160.00 Wed's, dragging 1-month implied vol up from a 4-year low of 6.7 to 7.6 since

• Traders are buying topside strikes toward 165.00 — hedging the risk that the JPY selloff has further to run

• But the 1-month 25-delta risk reversal tells a conflicted story — JPY calls meet demand at 0.55 vol above puts

• That is unusual — normally a surging USD/JPY would see demand for topside (JPY puts) dominate the skew

• The inversion signals intervention fear — the higher spot goes, the louder Tokyo's warning bells ring

• Owning JPY calls via the risk reversals or outright, would hedge the risk of a sudden JPY surge

• Options markets are caught between chasing the USD/JPY move higher and hedging the risk of a violent JPY rescue
USD/JPY 25 delta risk reversals


USD/JPY FXO implied volatility


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

• Cable falls to 1.3455 as Fed's hawkish tilt, higher oil prices buoy safe-haven dollar

• Brent oil rises 7% on report U.S. considering military options to break Iran deadlock

• 1.3455 is the lowest level since April 24 (1.3455 was also the low that day)

• BoE is expected to keep policy rate at 3.75% at 1100 GMT; hawk Pill to dissent

• 'Peak pound' may be over as multiple risks rise for UK markets

• 1.35 is now a GBP/USD resistance level (1.3493 was Asian session high)

GBPUSD


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

• EUR/USD sinks under the 200-DMA at 1.1675 to 1.1655 on Apr 30

• Brent $126 on report US considering military options to break Iran deadlock

• Traders started to bet on a euro rise during the ceasefire

• Net euro position flipped from short $1bln euro equiv to long $6bln

• Minor support at 1.1650 Apr 9 low and 1.1629 halfway point

Mar-Apr rise

• Sustained rise for oil prices may reassert long-term EUR/USD downtrend

•
EURUSD


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

• AUD/USD +0.2% Thur as focus returns to hawkish stance ahead of RBA meeting

• Futures pricing puts chances of OCR hike on Tue at 80.4%, statement pivotal

• Strait of Hormuz impasse continues, oil surges on refreshed supply concerns

• FOMC keeps statement easing bias despite rising dissent, FFR unchanged

• U.S. initial jobless claim (poll 215k), Mar PCE & Q1 GDP advance due Thur

• AUD challenge of major 0.7250-85 resistance zone possible in coming sessions

• Range Asia 0.71145-33, support 0.6834 0.6660, resistance 0.7250 0.7283
AUD Daily 55-DMA

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

Credit Agricole CIB Research highlights the reading from its month-end fixing model.

"Global equity markets were broadly firmer in April. In FX, the USD was broadly weaker on the month

Overall, the moves in equity markets, when adjusted for market capitalisation and FX performance this month, suggest month-end portfolio-rebalancing flows are likely to be strong USD selling across the board, with the strongest sell signal in the case of the USD vs EUR," CACIB notes.

• USD/JPY unchanged in Asia after trading in a 160.08-160.46 range

• Eases early on intervention fears, light sales by Japanese names

• Buyers emerge as hawkish Fed tilt, higher U.S. yields, oil rally support

• Brent crude hits highest since June 2022 as U.S.-Iran impasse continues

• Net short yen position vs dollar biggest since July 2024 - CFTC

• Japan retail investors hold biggest yen short vs crosses since 2020 - HSBC

• Resistance 160.45-50, 161.00, support 159.80-90, 159.40-50
Crossing the Rubicon:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• AUD/USD +0.1% Thur, trading subdued as traders reset for May 5 RBA outcome

• Futures pricing implies probability of 25 bps hike has risen to 80%

• Test of major 0.7250-85 remains likely in run up to Tue's RBA meeting

• FOMC keeps statement easing bias (3-dissenting votes), leaves FFR unchanged

• U.S.-Iran deadlock ongoing, oil surges on refreshed supply concern

• AU Q1 export prices +0.5% q/q, import prices +0.1% q/q

• U.S. initial jobless claim (poll 215k), Mar PCE & Q1 GDP advance due Thur

• Range Asia 0.71145-33, support 0.6834 0.6660, resistance 0.7250 0.7283
AUD Daily 55-DMA

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

• USD/JPY down 0.1% on light Japanese sales after closing 0.45% higher Wed

• Boosted by hawkish Fed shift, surging U.S. yields; 2-yr yield up 10 bps

• Rising oil prices sap JPY; Brent hits $120 for 1st time since June 2022

• Net short yen position vs dollar biggest since July 2024 - CFTC

• Japan retail investors hold biggest yen short vs crosses since 2020 - HSBC

• Traders brace for verbal intervention as Japan markets return from Wed break

• Resistance 160.45-50, 161.00, support 159.80-90, 159.40-50

• Wednesday range 159.52-160.48, Asia range 160.08-160.46
Japan yen positioning:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• NZD/USD -1.1% from Wed 0.58896 high as oil surges on renewed Iran war fears

• WTI above $108 a barrel as Trump talks about 'months-long' Iran blockade

• FOMC retains easing bias (but with increased dissent), leaves FFR unchanged

• NZD backs away from 0.5930 inflection point, more softness likely short term

• Futures pricing implies May rate hike probability eases to 50% chance

• Range NZ 0.5816-385, support 0.5680 0.5580, resistance 0.5930 0.6090-95
NZD Daily 55-DMA

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

• AUD/USD -1.0% from Wed 0.71895 high as markets calibrate FOMC outcome

• FFR unchanged, easing bias retained but with increasing opposition

• AUD traders reducing long positions in wake of Wed Q1 CPI beat

• RBA hiking bias remains intact, futures pricing implies 69.5% of May 5 hike

• Test of major 0.7250-85 remains likely on shoulder of Tue's RBA meeting

• U.S.-Iran deadlock ongoing, oil surges on refreshed supply concern

• AU Q1 import/export price data, U.S. Mar PCE & Q1 GDP advance due Thur

• Overnight range 0.71019-665, support 0.6834 0.6660, resistance 0.7250 0.7283
AUD Hourly Bollinger Study & DXY Daily 55-DMA

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

Bank of America Global Research previews the April BoE and ECB meetings on Thursday.

"We expect a hold from the BoE with a 7-2 vote (some risk of 8-1). We do not think there is enough evidence yet to convince the BoE to respond to the energy shock. Data so far has been somewhat hawkish but reflects limited decisive evidence on the fallout from the conflict. Moreover, comments from BoE Governor Bailey that he is in no rush to raise rates imply that the bar for an April hike is fairly high. Overall, we expect the BoE to emphasize a wait-and-see mode as it gathers more evidence on the economic impact of the conflict," BofA notes.

"The ECB is likely to hold rates next week, but the focus will likely be its communication, which we expect to be very close to what we have already heard from many ECB speakers. As President Lagarde argued this week, the ECB is ready to act when it has the information it needs. That means understanding the size and propagation of the shock. Moving in April would have required news on either the size or the propagation of the shock.

• EUR/USD -0.3% post-Fed, back testing the 200-day MA - a level that has held as a floor so far

• Break below here would be notable and open up 1.1640

• Fed unchanged as f/c, though three dissents on easing bias makes this is a hawkish hold

• Signals that incoming Fed Chair Warsh will find it hard to lean dovish from day one

• That said, EUR/USD downside likely capped near-term with the ECB decision ahead
EURUSD daily chart


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

• GBP$ near session low in NY afternoon -0.33% at 1.3473; NorAm range 1.3528-1.3467

• Fed prudently wary of inflation, cites high level of uncertainty over ME developments

• Fed holds rates steady, cites elevated inflation; three dissents against 'easing bias'

• Traders shift focus to BoE, ECB on Thursday, no changes expected, June hikes exp'd

• LSEG's IRPR shows steady Fed in 2026; BoE seen hiking in June +81bp by Dec meeting

• GBP$ supt 1.3469/67 Wed low/100-DMA, 1.3416 100-DMA, 1.3375 daily cloud base

• Res 1.3523/28 daily conv line/Wed high, 1.3544 daily cloud top, 1.3599 daily high Apr 17

GBP Chart:


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

• AUD -0.9%, 0.7100-15 support zone tested post-Fed

• Fed on hold as expected, but three dissenters pushed back on easing bias

• On balance, this is a hawkish hold, supporting dollar's bid

• That said, the Fed's rate path stays flat from here

• Break below 0.7100 opens door to 0.7050, this marks the next line in the sand

• On the crosses though, AUD remains the carry king with an RBA hike on the table next week
AUDUSD hourly chart


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

Nomura Research highlights the signals form its month-end fixing-model which point to USD buying across the board into the fix.

By Justin McQueen AUD/USD running out of steam into 0.7200 again, this time with a bit of help from a softer Q1 CPI print. Trimmed mean came in at 0.8% vs. 0.9% expected, which has nudged the Reserve Bank of Australia’s pricing a touch lower, but a May hike is still very much alive. On the crosses, AUD stays bid, with AUD/NZD remaining the cleanest way to play this.

The topside struggle against the USD makes sense when you look around as copper's gone quiet, while the yuan has done very little, and right now there is no commodity or China FX tailwind to push the button on AUD/USD breaking higher.

Technically, it has slipped through the 200-hour MA cluster which keeps 0.7100-15 in play on the downside. That's the level to watch.

Though on balance, given the RBA is on course to raise rates next week, the AUD will remain the highest yielder in G10. In turn, the currency should continue to elicit carry support, meaning pullbacks are likely stay shallow as long as risk sentiment holds a constructive tone.
AUD pricing


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

Morgan Stanley Research summarizes its tactical view on AUD and NZD.

"AUD View: Neutral | Skew: Neutral. We expect growth headwinds from fiscal tightening and a higher RBA policy rate to be offset by AUD-supportive hedging flows," MS notes.

"NZD View: Neutral | Skew: Neutral. We do not recommend long NZD positions despite a rise in 1Q non-tradeable inflation; sluggish growth diminishes the extent to which NZD can benefit from higher rates," MS adds.

Sterling is expected to remain range-bound in the near term as traders brace for pivotal policy guidance from the Federal Reserve and the Bank of England.

While both central banks are widely anticipated to hold rates steady this week, the spotlight remains firmly on the post-decision rhetoric to determine the divergence in policy paths for the remainder of 2026.

Currently, futures markets are pricing in a steady Fed through year-end.

The BoE is facing mounting pressure to combat persistent inflation, and UK short-term futures are discounting a 72% chance of a rate hike in June, with as much as 68bp of tightening priced in by the December MPC meeting.

From a technical perspective, GBP/USD exhibits a neutral-to-soft bias, with immediate support found near the recently bruised 100-day moving average at 1.3468 and the 21-day moving average at 1.3443, a breach below the 100-DMA could lead to a decline toward the 200-day moving average at 1.3416.

Conversely, while above these levels, the pair remains constrained by the daily cloud top, currently at 1.3544. A break above the daily cloud will put the April 17 trend high of 1.3599 and the rising upper 30-d Bolli at 1.3650 in focus.
Chart:


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

Goldman Sachs Research previews today's April FOMC meeting.

"The FOMC is likely to reiterate its wait-and-see message at its April meeting this week because the war with Iran continues to cloud the economic outlook and to present risks to both inflation and activity," GS notes.

"The Committee's post-meeting statement is likely to acknowledge the better labor market news and higher inflation numbers but to leave the standing policy guidance unchanged. We expect a strong consensus to stay on hold for now, with only one dissent, as in March," GS adds.

Bank of America previews today's April FOMC meeting and USD likely reaction around the meeting.

"The Fed will remain firmly on hold at its April meeting.  We anticipate only one dissent.Chair Powell should sound hawkish in what will probably be his last presser. 

The April FOMC is unlikely to be a major event for the USD, but risks skew marginally bullish, to the extent that Chair Powell reiterates his more hawkish tone from March," BofA notes.

"In terms of any forward guidance any revealed discussion of hikes would be a surprise, likely sparking a USD rally. On the other hand, denying any material discussion took place could weigh on the USD slightly," BofA adds.