Vaccine-fuelled optimism still prevailing
Tuesday 16 February 2021
Risk sentiment remains positive overall as equities and commodities/metals continue to stay underpinned.The Pound has been joined by commodity currencies finding demand amid the global vaccine-led optimism and reflation trades. USD selling is notable but still seeing some JPY and CHF supply on the better risk tones.
China's week-long Lunar Holiday continues but today the US markets re-open after Presidents Day. The Forex jury is ever-fickle amid all the noise and sentiment can turn quickly so keep playing what's in front of you and don't over analyze or assume anything.
GBPUSD continued to find support at 1.3880 but is failing around 1.3950 so far helped by some expected EURGBP demand into 0.8700 after that EURGBP options-led support between 0.8725-30 had played out.EURGBP duly held 0.8725-30 where we had the decent-size option interest yesterday but then retreated once expiry time was past as GBPUSD continued to be underpinned above 1.3900. A test of 0.8700 has followed but bounced to 0.8730 where we have naturally found a cap at the moment. GBPJPY found a decent base into 146.40 this time and posted fresh recent highs of 147.30 amid the better risk sentiment and positive GBP with general JPY supply still.
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 has 105.20 now providing a good base amid the firmer risk sentiment and general JPY supply but failing above strong resistance at 105.60 so far. EURJPY has made a good base at 127.60 now amid the core pair dip demand and testing 128.30.EURUSD is testing 1.2150-60 this morning amid the firmer EUR on the crosses and risk tones after finding some dip demand at 1.2120 this time around. USDCHF found a good cap at 0.8910 this time as EURUSD rallied with EURCHF range bound but with the SNB ever watchful and this time holding 0.8880 as I type.
AUDUSD has duly found sellers at 0.7800-05 in its latest advance higher but still underpinned as commodity currencies find favour and USD tones remain soft overall still.USDCAD found a good cap at 1.2660 after falling through that key support line and has retreated to test 1.2600 amid softer USD/firmer oil tones.
Congrats to India on an impressive destruction of our boys on a much more suitable surface for them. Day/Night Test next which will be interesting to say the least.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.40 GMT