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  • Writer's pictureMike Paterson

Euro rallies after Draghi disappoints the doves

Friday 26 July 2019

Yesterday saw the Euro initially wobble after a brief relief rally on them keeping rates on hold but then rally again as Draghi turned less dovish suggesting inflation targets could be moved and "...rate cuts will come with mitigating measures". Markets had been expecting softer tones and indeed we've seen some Euro correction lower again but now believe the ECB to be biding their time as they wait to see what the US Fed do next time as CBs continue to find themselves between a large rock and very hard place.

Elsewhere there's been some notable USD demand after decent US data yesterday eventually filtered through creating some risk-on sentiment initially before general fragility returned.Today sees the latest US GDP data and we should expect the algos to feed well on anything wide of expectations.

GBPUSD rallied to once again test the 1.2520 area before failing on the stronger USD and EURGBP and we're back down to test 1.2425-30 as I type where I've taken some more profit. Very large option expiries today at 1.2500 should help cap rallies ahead of that good sell interest between 1.2520-30 again.EURGBP had a look below 0.8900 but then rallied strongly amid the general EUR demand to post 0.8969. I warned yesterday that "dip demand remains on both" with and so it proved. GBPJPY sellers remain poised as ever amid the fragile risk sentiment overall but still finding some decent dip demand as USDJPY rallies to 108.74.

I remain GBP bearish overall and will continue to rally-sell as my preferred strategy amid all the uncertainty/indecision including Brexit/political fallout but happy to buy back in the dips as always.

EURUSD is back down clinging to the pivotal support at 1.1125-30 having yesterday held 1.1100 and bouncing only to fail at 1.1188 as per my tweets at the time.USDJPY enjoyed a decent rally on the general USD data-led demand which gave rise to risk-on Yen selling too but rally sellers poised again around 108.80-00.USDCHF has also found dip demand helped by some good EURCHF buying with the SNB never far away to keep sellers on their toes.

AUDUSD has posted fresh recent lows of 0.6929 amid the general USD demand and remains on the back foot while

USDCAD duly held the 1.3120-30 buy interest I've been highlighting and has rallied to test the 1.3180 offers.

Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.

Have a good day/weekend out there one and all.

Interbank Rate 08.22 BST

GBPUSD   1.2430

EURUSD   1.1140

EURGBP   0.8961

GBPEUR   1.1157

GBPAUD   1.7926

GBPCAD   1.6373

GBPJPY   135.03

GBPZAR   17.5820

GBPHKD   9.6370

USDJPY   108.64

USDZAR   14.1575

EURJPY   121.02

EURCHF   1.1042

EURHKD   8.6508

AUDUSD   0.6934

USDCAD   1.3173

USDCHF   0.9914

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