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  • Mike Paterson

Firmer risk and USD tones return

Tuesday 26 October 2021

Some firmer risk and USD sentiment prevailing again this morning with Central Bank rate hike conjecture still in focus wuth the latest decisions from the BOC (tomorrow) then BOJ and ECB on Thursday. Equities and oil remain underpinned overall along with yields and commodity currencies still perky as Gold holds above 1800.The preliminary estimate of month-end FX hedge rebalancing points to slightly above average USD selling this week but we're not seeing evidence of that, for the moment at least.

For FX markets focus on the price action and decide what presents value or doesn't, and if in doubt, keep out. Be aware of those rising support lines and/or falling resistance levels. Forex is not rocket science but it is ever-fickle so you have to stay in control of you/your trades as much as you can.

GBPUSD: Yesterday saw another test of 1.3735-40 and some pips banked in the retreat but the bounce since has failed above 1.3785 amid the stronger USD tones but underpinned by the GBPJPY risk-on demand and EURGBP supply.I remain a rally seller overall but still respecting the ongoing dip demand while keeping an eye on EURGBP and GBPJPY as always. EURGBP: 0.8435-40 now broken and new recent lows of 0.8412 posted,helping to underpin GBPUSD. A small rally since but sellers poised as EURUSD clings to 1.1600. GBPJPY: Good support emerging now at 156.50 on the better risk tones and now back up through 157.00 again. Still prefer to sell rallies amid the variable risk overall while respecting dip demand on this and core pairs.

I remain a GBP rally seller across the pairs overall as my preferred trading side albeit against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.

EURUSD: Now broken down through the good support at 1.1620 after failing above 1.1640 and now testing 1.1600 again where we have decent option interest in play too per my previous warning while the pair remain in the middle of cross-flow action. USDJPY: Finding good support around 113.50 and now back above 114.00 helped by some JPY supply again. EURJPY: Support line still around 132.00 now but with rally sellers poised again as the picture remains murky and the Euro finds supply. USDCHF: 0.9180-00 now the latest support area amid the firmer USD tones and with the SNB ever vigilant but equally sellers remain poised as EURCHF struggles to get back over 1.0700 again. EURCHF: That 1.0660 support has provided a good base and now more at 1.0680 with the SNB ever vigilant but sellers poised in the rallies still.

AUDUSD: 0.7480 now providing good support as commodities remain firm and helped by renewed AUDJPY demand on the better risk tones.USDCAD: Support now at 1.2360 line returning amid the firmer USD tones but failure at 1.2400 where we have large option interest today amid CADJPY demand returning as oil remains perky.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.48 BST

GBPUSD 1.3770

EURUSD 1.1600

EURGBP 0.8423

GBPEUR 1.1870

GBPJPY 157.06

GBPCAD 1.7061

GBPZAR 20.2761

GBPHKD 10.7268

USDJPY 114.04

EURJPY 132.32

EURCHF 1.0700

EURHKD 9.0369

AUDUSD 0.7495

USDCAD 1.2381

USDCHF 0.9222

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