• Mike Paterson

FX jury still out

Thursday 11 February 2021

We're still seeing some USD weakness overall but definitely pausing for the moment as markets continue to make their mind up. Risk sentiment remains positive overall as equities and commodities continue to stay underpinned but also pausing on recent gains.

Yesterday's US CPI data gave the Greenback another wobble, excessively in real terms but the algos don't care for common sense, and last night's comments from US Fed's Powell produced nothing of note. China's week-long Lunar Holiday began today and also adding to the current market malaise.

As if you need reminding I'll repeat again that the Forex jury is erver fickle amid all the noise so keep playing what's in front of you and don't over analyze or assume anything.

GBPUSD found a base at 1.3800 to now post new highs of 1.3865 amid the USD selling post-CPI data before retreating helped by GBPJPY capping and EURGBP holding the 0.8750 support line. EURGBP yesterday failed into 0.8780 but equally found support at 0.8750 and tightly bound since with large option contract expiries rolling off today between 0.8765-80 as per my earlier tweet. GBPJPY found a decent cap above 145.00 but equally finding support at 144.60 so far as tight ranges prevail on core pairs.

I still have a naturally bearish stance on GBP overall and remain poised to sell into rallies but respecting dip demand still with price action ever fickle. Equally a case still for going long in the dips therefore as we continue to range. Patience and not getting greedy remain key.

USDJPY yesterday morning rallied sharply to 104.80 from 104.40 amid some BOJ comments and general USD demand at the time but ranging tightly since. EURJPY is testing 127.00 again after a good hold of 126.70 so far amid the variable USD/risk tones.EURUSD found good support this time at 1.2115 abut equally struggling to get over 1.2140 amid the variable USD and cross plays. USDCHF found a good base at 0.8890 this time as EURUSD capped with the SNB ever watchful.

AUDUSD found support at 0.7710 this time after failing above 0.7750 but underpinned still amid the generally softer USD tones while USDCAD found a good cap this time at 1.2720 as the Greenback fell again and now testing 1.2680 support as I type.

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

Interbank rates: 08.15 GMT

GBPUSD 1.3827

EURUSD 1.21221

EURGBP 0.8768

GBPEUR 1.1405

GBPAUD 1.7859

GBPCAD 1.7543

GBPJPY 144.70

GBPZAR 20.2825

GBPHKD 10.7201

USDJPY 104.66

USDZAR 14.6642

EURJPY 126.85

EURCHF 1.0793

EURHKD 9.3995

USDCHF 0.8904

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