Forex news

Diverging interest rate expectations between the Federal Reserve and the rest of the developed world have been THE biggest story of the year for FX traders (USD/JPY in particular), and Friday’s Core PCE report will be the next major test to determine if that trend will carry over into Q2

Disparity between US and Eurozone PMI data bodes well for euro. For now, the US dollar has rebounded slightly ahead of GDP and core PCE data. EUR/USD technical analysis shows rates testing a pivotal area circa $1.07 - a potential break above here would be ideal for the bulls.

The US 2-year bond yield remains support, which is capping the yield at 5% and weighed on the US dollar. And that helped AUD/USD rise for a second day ahead of a key AU CPI report.

It has been a risk-on session so far, with equity indices rising sharply for the second consecutive day ahead of Tesla’s earnings tonight and other big tech companies reporting this week. Also on the rise today have been markets such as crude oil, the EUR/USD and even the GBP/USD. Sentiment was lifted by stronger PMI data from the services sector in Europe and UK, alleviating growth concerns even if the manufacturing sector PMI continued to remain depressed.

The US dollar rally has stalled, and the longer is fails to extends its gains the greater the odds of a pullback. For today, flash PMIs have placed GBP/USD and EUR/USD into focus.

GBP/USD remains in “sell rallies” mode, so bullish readers will want to be nimble against a broader backdrop that favors more downside from here.

US GDP, Core PCE and BoJ policy are among the risk events this week for the USD/JPY currency pair, as the focus turns to sticky inflation and elevated interest rates narrative from Middle East concerns for now. USD/JPY technical analysis point to a potential rally above 155.00.

With the odds of a Fed cut arriving this year now in jeopardy, it is now over to the BOE, ECB or BOC to take the title as ‘first to begin easing’. And that brings Canadian CPI data into focus today for CAD traders.

USD/JPY is less than a day's trade from 155, a level an ex-FX diplomat warned could trigger an intervention if breached. WTI crude oil seems to have solid support above $84, to hint at a swing low.

The GBP/USD could be impacted significantly by UK CPI data this week. For now, markets are calm as Iran tensions have eased, but the situation remains volatile, likely to keep risk appetite low. The GBP/USD outlook is bearish as US dollar is likely to remain supported on any short-term dips.

Net-short exposure to yen futures rose to a 16-year high last week, and now within reach of its record. Asset managers appear to be on the right side of the US dollar trade, with large speculators remaining net-short despite the dollar's rally. Net-long exposure for oil and gold futures continued to trend higher, but neither are at levels which screams sentiment extreme. And asset managers are on the cusp of flipping to net-long exposure to the VIX.

Risk assets tumbled on Middle East tensions, adding additional pressure on the cable on Friday with US dollar already on the rise. Key UK inflation data is coming up in the week ahead, as GBP/USD technical analysis point lower after breaking 1.25 key support.

DJIA analysis: Stocks tumble on Middle East jitters, as VIX spikes. US dollar has also extended its rally on reduced rate cut expectations and risk off sentiment. Meanwhile, gold looks like it may have topped out.

The ECB is moving closer to cutting rates while the Fed’s timeline lengthens. This is bearish for the EUR/USD forecast. Today, the UoM surveys will come out and we have a few Fed speakers too.

Another day, another milestone for USD/JPY which closed above 152 for the first time in nearly 34 years on Thursday.

All eyes are on today's ECB meeting, Fed speakers and US PPI figures to see if it can drive ERUR/USD lower or spark a rebound, after it suffered its worst day in 13 months on Wednesday.