Softer US Dollar tones prevailing

Tuesday 19 October 2021

Variable risk sentiment with the main recent trend of weaker JPY prevailing still but amid some softer USD tones still as European trading gets underway after losses in Asia. Markets continue to second-guess CBs on interest rate hikes with the BOE leading the way in November being factored in to support the Pound still.

Equities and oil remain underpinned overall along with yields and opening higher in Europe after a small retreat in Asia while Gold is on 1780 session highs after holding 1760 yesterday.

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: Once again held the rising lows of 1.3700-20 that I noted yesterday and using the softer USD and GBPJPY demand to post fresh recent highs of 1.3786 so far. I remain a rally seller overall (BOE could easily disappoint too) but still respecting the ongoing dip demand while keeping an eye on EURGBP and GBPJPY as always.

EURGBP: A good hold of 0.8415-20 yesterday before a rally back through 0.8440 as EURUSD broke higher only to fail aobve 0.8460 so far. GBPJPY: Good support still at 156.60-80 and up through 157.00 again but capping this time at 157.30 as USDJPY retreats. Still respecting current market 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: Those rally sellers poised above the 1.1600 area now history as the pair finds itself rallying well and now through key 1.1650 resistance amid the softer USD/firmer risk tones but still in the middle of cross-flow action. USDJPY: Still underpinned amid the ongoing JPY supply generally but now down through support at 114.00 amid the softer USD tones. EURJPY: Support line in the sand now at 132.50 amid the general JPY supply as EURUSD rally outstrips USDJPY retreat. USDCHF: 0.9240 support now gone and testing old lines at 0.9200 as EURUSD rallies and USD sellers return but EURCHF still above 1.0700 (hello SNB again?) but rallies still limited amid the CHFJPY demand. EURCHF: 1.0700 support still in place with SNB shadow ever present but still failing at 1.0740 as USDCHF retreats.

AUDUSD: Now with a support line in the sand at 0.7420 after breaching 0.7440 on the AUDJPY demand/softer USD double whammy despite dovish/cautious RBA Minutes. Gold/metals price support in the mix too. USDCAD: 1.2320 now being tested in this extended retreat helped by the ongoing oil-led CADJPY demand and generally softer USD after breaking down through 1.2345-50. Some decent option interest tomorrow at 1.2300 potentially in play

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

Interbank rates: 07.55 BST

GBPUSD 1.3775

EURUSD 1.1648

EURGBP 0.8456

GBPEUR 1.1825

GBPJPY 157.10

GBPCAD 1.6984

GBPZAR 20.1030

GBPHKD 10.7346

USDJPY 114.04

EURJPY 132.84

EURCHF 1.0722

EURHKD 9.0779

AUDUSD 0.7470

USDCAD 1.2327

USDCHF 0.9204