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  • Mike Paterson

US Dollar drips lower

Tuesday 18 May 2021

After some tight-range two-way business we've now seen a few breakouts amid a softer Greenback that has fallen across the board in a drip by strip slow steady fashion. JPY supply notable again on better risk tones with equities and commodities on the rise still but capping a little as I type

I have warned before about the dangers of getting complacent in tight range markets where the tendency is to think that prices won't move far away so the discipline of placing stops gets a little forgotten. In fact the reverse is true and those of you who have had 1-2-1 sessions with me know how I approach this by constantly re-assessing intra-day trading ranges.

The encouraging UK jobs/wages report earlier this morning helped to put a further spring in the GBP step and the DAX hitting all-time highs helping the Euro along with the ongoing large EURUSD Put option interest between 1.2125-75 that I have been highlighting here and on Twitter.

Jury on the Greenback still out overall despite the current obviously softer trend so ignore the noise and, as always in these fickle times, be careful with your trading. Pick your preferred entry/exit levels and don't be greedy or over-analyze. Patience and discipline are key too of course.

GBPUSD: Yesterday I noted that the 1.4080 resistance had now become a decent base and so it proved as we held 1.4090 on three attempts beore finally breaking up through 1.4150 to post highs so far of 1.4207. Stops triggered through 1.4150 and a steady climb to the highs thereafter. EURGBP: A good hold of 0.8580 but equally still capping above 0.8600 as core pairs both rally in tandem.

GBPJPY: Now underpinned at 154.20 amid the general JPY supply and core pair dip demand but sell interest at 154.80 helping to cap for the moment.

I remain a GBP rally seller across the pairs but still not getting over greedy with expectation on the retreats.

EURUSD: A good hold of 1.2140-50 this time amid the general USD softness and firmer bund yields but also with those large option Puts in play as I warned here and on Twitter. Nothing rolling off today but interest again tomorrow and Thursday. Happy to watch this pair for the moment.USDJPY: Now capping at 109.30 amid the softer Greenback but holding 108.85 so far with some general JPY supply still notable. EURJPY: 132.60 now a decent base and breaking up through 133.00 as I type amid general EUR strength.USDCHF: In retreat at 0.8965 from 0.9040 as EURUSD rallies but SNB ever watchful and ready to help.EURCHF: Capped into 1.0980 this time as USDCHF fell but some general EUR demand and SNB shadow keeping it underpinned.

AUDUSD: A good hold of key 0.7730 support again and then solid rally to 0.7760 helped by those large options rolling off as I warned and now breaking 0.7800 as I type amid the softer USD/firmer gold tones. Decent option interest again today at 0.7750 should help underpin.USDCAD: Capping at 1.2130 amid the softer USD/firmer oil tones and targetting 1.2000. CADJPY demand notable still.

Let's continue to be careful out there in all things. Staying safe must be our main priority still. Have a good week-end everyone.

Interbank rates: 08.42 BST

GBPUSD 1.4196

EURUSD 1.2200

EURGBP 0.8595

GBPEUR 1.1635

GBPAUD 1.8195

GBPCAD 1.7074

GBPJPY 154.71

GBPZAR 19.8927

GBPHKD 11.0091

USDJPY 108.97

USDZAR 14.0005

EURJPY 132.98

EURCHF 1.0954

EURHKD 9.4622

AUDUSD 0.7802

USDCAD 1.2025

USDCHF 0.8976

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