Euro under pressure still amid fragile risk sentiment
Wednesday 6 May 2020
Yesterday's better risk sentiment didn't last long as I warned but the current focus is on a softer Euro after the German constitutional court poured doubt on the vailidity of the ECB's COVID-19 emergency measures. We're also seeing some retreat in equity and oil prices as the European session gets underway and that's producing a few risk-off plays again.
GBPUSD has found a new support line at 1.2420 helped by a weaker EURGBP but still unable to break back up through 1.2485 and now 1.2450 this morning amid the risk-off GBPJPY supply. Re-sells duly made upstairs and staying core short.EURGBP capped around 0.8750 (GBPEUR support 1.1425) and retreated to look at the 0.8685 bids amid the general EUR supply. The retreat has helped put a bid under GBPUSD too but jury still out.GBPJPY remains under pressure on the risk-off return and USDJPY falls below 106.50 but has found good support around 132.00 now but rally sellers stay poised.
I stay poised to sell GBP rallies overall and buy back in the dips as ever but patience continues to be a virtue and entry level key as always.
USDJPY failed above 106.85 and finally fell back below 106.50 amid the softer risk plays. Rally re-sells duly placed and some pips taken at 106.30 as we're ranging still.EURJPY has retreated further and broken down through Sept 2019 lows on the general EUR supply and risk-off but holding 115.00 atm. EURUSD failed around 1.0920 on an initial algo read of the German constitutional court decision but the severity of the undertones soon had the pair in retreat to test good bids/support at 1.0825 and lower this morning to 1.0816 having held 1.0850-60 on the bounce. USDCHF has now held 0.9680 and rallied to 0.9735 as EURUSD fell and with EURCHF holding 1.0520 amid the SNB still supporting.
AUDUSD duly capped at 0.6475 and has retreated amid the softer risk plays with AUDJPY notable but now finding support at 0.6420. USDCAD has this time failed around 1.4100 and since retreating to look at that 1.4020 support line I've been highlighting .
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.24 BST