EUR
The market continues to drift aimlessly, with little significant news to provide direction. Seasonal factors and the anticipation of Hassett’s potential appointment to the Federal Reserve seem to be the primary drivers at the moment. However, the current low volatility and limited appetite in this period are discouraging substantial dollar-selling activity, at least across our franchise, which remains more of a gradual trickle than a surge.
This remains very much a trading market for me. The only core positions I’m holding are shorts in EUR/SEK and EUR/PLN, both of which are poised to benefit from seasonality and the generally risk-friendly environment. I still favor USD/JPY on dips heading into the Bank of Japan meeting, trading around those levels, but overall, I’m finding it challenging to meaningfully push the dollar lower with such weak momentum beyond intraday moves.
The euro is attempting to reassert itself, showing resilience even against aggressive headlines involving Putin, which only caused temporary disruptions. It’s now testing a resistance zone with multiple tops around 1.1650-70. While some may look to chase a breakout above that level, I see little reason for price action to accelerate significantly, likely maintaining a slow pace heading into the Federal Reserve meeting next week.
GBP
Regarding sterling, the Office for Budget Responsibility (OBR) provided plenty of headlines yesterday during the Treasury Select Committee session. The standout was Miles, who aligned with Reeves in stating she had not been misleading in her pre-Budget speech but criticised the government’s productivity forecast leaks as unhelpful. Sterling initially reacted to this point but failed to sustain any momentum. I anticipate this delivery discord will fade, leading to a gentle reduction in market positions over the coming weeks. We saw better selling of pounds yesterday for RM (1.75z) and DHF (1.5z), offset by SHF (1z). EUR/GBP remains in a 0.8750/60 to 0.8865/75 range. Key support for cable is at 1.3150, while the 50-day (1.32665) and 200-day (1.3321) moving averages will be closely monitored. With limited data releases this week—final PMIs and hawkish Mann speaking at 17:00 GMT—I remain bearish on GBP in the medium term but prefer to stay on the sidelines for now.
JPY
In the FX space, the market remains tactical and rangebound. The main story is Trump’s decision to delay the Federal Reserve announcement until January, though he effectively revealed his choice yesterday by cancelling all other interviews in favour of one candidate, presumably Hassett. Betting markets now place the odds of Hassett’s appointment at around 90%. This development has steepened the US yield curve and mildly softened the dollar. On the Japan side, there’s little to discuss, as all signs point to a weaker yen unless Ueda unexpectedly shifts the terminal rate (a scenario that seems implausible). Today’s focus will be on ADP and ISM Services data, but the market’s attention is firmly set on the NFP report on the 16th. I maintain a long bias in USD/JPY, with the next resistance levels at 156.60/70 and 158.00, while major support remains at 153.00/30.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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!