EUR
The month ended with notable activity, as the dollar extended lower in thin liquidity. Surprisingly, there was no retracement today, even with markets feeling jittery this morning, partly due to the crypto move spilling into other asset classes. My focus now shifts to the upcoming payrolls report and the announcement of the next Fed Chair, given the lack of significant data ahead of next week's FOMC meeting. The message from the meeting is likely to mirror the tone of the last rate cut—if they do decide to cut, that is.
It's challenging to build strong conviction at this time of year, with considerable news to digest in the coming weeks, so I remain cautious. I took advantage of the dip in EUR/SEK to trim my position slightly, hoping seasonal factors will provide better re-entry levels in the next week or so. Additionally, I squared up the rest of my tactical NZD longs, as the kiwi has seen a strong recovery across the crosses. Rotating back into AUD seems more logical at this point. I've left some bids in USD/JPY near the 154 handle if it trades there, as I’ve been reluctant to chase the highs. With Ueda’s speech signaling a December move—unless the meeting itself hints at a series of hikes leading to a higher terminal rate, which seems unlikely—the entry level now feels more attractive. On Friday afternoon, I also added some USD/CAD, as the underlying GDP data wasn’t as strong as the headline suggested, and the entry felt favorable given month-end dynamics. I remain short EUR/PLN as well.
The euro is inching higher but lacks momentum overall. Inflation prints haven’t moved the needle on rates, and the euro is mostly trading in line with dollar flows rather than any local specifics. Last week, we were generally better sellers of the Greenback across most sectors. Strong resistance for EUR/USD now lies above 1.1650–70, which seems tough to breach without significant news. I remain neutral here.
GBP
The aftermath of the Budget continues to reverberate. Reeves had to deny allegations of misleading the public, particularly after her pre-Budget speech painted a grim picture, only to later announce a larger fiscal headroom. It’s clear she aimed to manage perceptions in financial markets, but she’ll need to weather the current storm to maintain credibility. Personally, I don’t see her position as untenable—resignations from the OBR would likely come first. Starmer is set to speak at 10:30 GMT to reinforce the narrative and stabilize sentiment, though the real challenge will come during the local elections in May. I expect the noise to subside, leaving sterling shorts questioning their next moves in the absence of data and with a well-priced BoE (22bp). For now, I remain neutral. EUR/GBP ranges between 0.8750/60 and 0.8865/75. Cable support lies at 1.3150, while the 50-day (1.3277) and 200-day (1.3316) moving averages will be closely watched. This week’s data calendar is light, with final PMIs, the REC survey, and speeches from Dhingra (dove) today at 15:30 and Mann (hawk) on Wednesday.
JPY
Ueda’s overnight speech was less dovish than expected but not outright hawkish. Pricing for the next meeting has shifted to 20bp, and our Research team has also moved their hike forecast forward to December. However, it’s hard to see anything that would push the terminal rate beyond 1%. There had been speculation that Ueda might use this speech to push back on market pricing (previously at 15bp), so I expect JPY to trade relatively well today. With 20bp priced in, JPY bears may have little to worry about from the Japanese side. I’m comfortable buying dips in USD/JPY if it extends through 155, with solid support expected around 153.00/25.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!