Category: Currencies

  • USD/CHF Grinds Higher as SNB Easing Bias Persists – Monday, 1 June

    Snapshot: USD/CHF is trading at 0.7850, up 0.43% on the session, as the SNB’s active easing posture continues to weigh on the Swiss Franc. Schlegel’s recent remarks did not rule out a return to negative rates if disinflation overshoots, keeping downward pressure on the currency. Focus shifts to the 10:00 ET ISM Manufacturing PMI release for potential USD catalysts.

    • Watch for a break above intraday high of 0.7851; failure to breach this level may signal a temporary pullback.
    • Risk lies in a surprise hawkish shift from the Fed, potentially stemming from stronger-than-expected US data today.

    Bias into NY: We favour further USD/CHF upside while the SNB maintains its dovish stance and headline CPI remains near zero. Look for a test of 0.7875 if the ISM data supports a stronger dollar, amplified by the US-CH 10Y yield spread at +404bp.

  • Kiwi Under Pressure as RBNZ Easing Bias Persists – Monday, 1 June

    Snapshot: NZD/USD trades at 0.5954, down 0.44% on the session, as the firmly entrenched easing bias at the Reserve Bank of New Zealand continues to weigh. While domestic macro prints are absent today, the market remains sensitive to Governor Orr’s signalling of potential further easing if disinflation becomes embedded. The FOMC’s Powell speaks at 20:30 ET, though the primary focus is on domestic drivers.

    • Watch for any further comments from RBNZ officials that might hint at the timing or magnitude of future rate cuts. The 0.5950 level represents intraday support.
    • Risk stems from a potential upside surprise in this morning’s ISM Manufacturing PMI (10:00 ET), which could offer some unexpected support to the USD.

    Bias into NY: Expect continued downward pressure on NZD/USD. The RBNZ’s dovish stance is likely to keep the pair capped below 0.6000, unless there’s a significant shift in broader risk sentiment or a substantial weakening of the USD due to poor US data.

  • NY Session Tactical Brief – Friday, 29 May

    Regime: Mixed, with VIX at 16.29 reflecting contained risk, but rising US 10Y yield at 4.439% suggesting real-rate concerns.

    Today’s market themes:

    • Dominant: Real-rate repricing as inflation proves stickier than expected, driving USD strength and pressuring risk assets.
    • Secondary: Geopolitical tensions (Iran) and its impact on oil supply.

    The setup: Markets are pricing in a more hawkish Fed, underpinned by resilient economic data and persistent inflation. Short equities, targeting a dip in S&P 500 to 7500, with a stop loss at 7600. Risk is a dovish surprise from BoE Gov Bailey’s speech or weaker-than-expected Canadian GDP.

    Watch list (native time per event):

    • 08:29 CET EUR: German Prelim CPI m/m (forecast 0.1%, prior 0.6%)
    • 09:20 London GBP: BOE Gov Bailey Speaks
    • 08:30 ET CAD: GDP m/m (forecast 0.1%, prior 0.2%)

    Bias by asset:

    • DXY:
      • Direction: Bullish.
      • Domestic (US): Hawkish Fed rhetoric, resilient data, rising yields.
      • Cross: Global risk aversion, EUR/USD weakness.
      • Levels: Support 98.90, Resistance 99.20.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): ECB’s mild easing bias, weaker growth data.
      • Cross: DXY strength, widening US-DE 10Y spread.
      • Levels: Support 1.1620, Resistance 1.1660.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): BoE dovish tilt, potential service CPI weakness.
      • Cross: DXY strength, negative US-UK 10Y spread.
      • Levels: Support 1.3400, Resistance 1.3460.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ slow normalization, intervention unlikely near-term.
      • Cross: Rising US 10Y, DXY strength, risk-on mood.
      • Levels: Support 159.00, Resistance 159.50.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): Weaker GDP, sensitivity to oil price moves.
      • Cross: DXY strength, widening US-CA 10Y spread.
      • Levels: Support 1.3780, Resistance 1.3840.
    • AUD/USD (Aussie):
      • Direction: Neutral.
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, China growth uncertainty.
      • Levels: Support 0.7150, Resistance 0.7180.
    • NZD/USD (Kiwi):
      • Direction: Neutral.
      • Domestic (NZ): RBNZ rate hike expectations, dairy price watch.
      • Cross: DXY strength, risk sentiment.
      • Levels: Support 0.5930, Resistance 0.5985.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB easing bias, low Swiss yields.
      • Cross: DXY strength, diminishing safe-haven appeal.
      • Levels: Support 0.7800, Resistance 0.7850.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Neutral.
      • Domestic: Relative CB stance + yields: EUR/GBP BoE more hawkish, EUR/JPY BoJ less hawkish, GBP/JPY both dovish.
      • Cross: DXY, risk sentiment influences cross-of-crosses dynamics.
      • Levels: Monitor each cross’s intra-day range.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields, muted breakevens.
      • Cross: DXY strength, risk-off reducing demand.
      • Levels: Support 4500, Resistance 4580.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Subdued industrial demand, weak gold.
      • Cross: DXY strength, risk aversion hurting industrial metals.
      • Levels: Support 7500, Resistance 7700.
    • WTI / Brent:
      • Direction: Bearish.
      • Domestic (asset-specific): Potential US-Iran agreement easing supply risks.
      • Cross: DXY strength, risk-off sentiment.
      • Levels: WTI Support 86.50, Resistance 89.00.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns, LME inventory levels.
      • Cross: DXY strength, global growth proxy weakening.
      • Levels: Support 635, Resistance 645.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Rising yields, earnings concerns.
      • Cross: VIX stabilizing, but fragile; global risk tone negative.
      • Levels: Futures support 7570, Cash resistance 7570.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Rising real yields, mega-cap vulnerability.
      • Cross: Rates-sensitivity, VIX uncertainty.
      • Levels: Support 30200, Resistance 30400.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): Mixed earnings, cyclical sensitivity.
      • Cross: Bond-yield reaction, less sensitive than tech.
      • Levels: Support 50700, Resistance 50900.
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): Sterling strength capping gains.
      • Cross: Global risk-off offset by weaker GBP.
      • Levels: Support 23300, Resistance 23550.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): Bund yields rising, weak EU data.
      • Cross: US tech weakness, DXY strength adding pressure.
      • Levels: Support 25000, Resistance 25200.
    • Nikkei:
      • Direction: Neutral.
      • Domestic (JP): JPY weakness supportive short-term, BoJ uncertainty.
      • Cross: US tech correlation, overall risk sentiment.
      • Levels: Support 65000, Resistance 66500.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Weak ETF flows, elevated funding rates.
      • Cross: DXY strength, risk aversion hitting crypto assets.
      • Levels: Support 73000, Resistance 74000.

    Positioning watch: JPY is crowded short (4th percentile), and AUD is crowded long (98th percentile). A hawkish surprise from the BoJ or disappointing China data could trigger a painful squeeze.

    The pain trade: A surprisingly dovish BOE and weak US data, fueling a rapid unwinding of USD longs and a squeeze of crowded JPY shorts.

  • DXY Creeps Higher, Fed Patience Still Paramount – Friday, 29 May

    Where we are: The DXY is currently trading at 99.01, up 0.07% on the day and holding near the top of its intraday range of 98.90-99.15. The index is attempting to build on yesterday’s gains, trading slightly above the prior NY close near 98.94. Immediate resistance is seen at the intraday high of 99.15, while support should emerge near the 98.90 level.

    What’s driving it: The dominant driver remains the market’s assessment of the Fed’s reaction function, which is currently priced for a patient hold. Recent commentary from Fed officials, such as Schmid, reaffirms the Committee’s focus on inflation and data dependency. With the Fed funds target range at 4.25-4.50% and the dot plot suggesting only two cuts in 2026, the Dollar is benefiting from the perception of a higher-for-longer rate environment relative to other developed markets.

    • US 10Y yields are edging higher, currently at 4.439%, providing modest support to the Greenback.
    • The 2s10s spread remains inverted at 0.46%, a lingering recessionary signal that could cap further Dollar upside.
    • CFTC data shows speculators are modestly short USD (-479 contracts), suggesting room for a short squeeze if the data continues to favour a hawkish Fed narrative.

    NY session focus: All eyes will be on risk sentiment in the early part of the session. No major US data releases are scheduled today, meaning the focus will be on any further wire headlines or intraday shifts in US yields to determine Dollar direction. Watch for a break above 99.15 to open a path to 99.30, while a move below 98.90 could trigger a test of 98.70. The trade that is working is buying dips in the DXY, while the trade at risk is further shorting the Greenback without a clear catalyst. The pain trade would be a significant risk-on rally that undercuts the Dollar’s yield advantage.

  • Euro Under Pressure as ECB Rate Cut Bets Mount – Friday, 29 May

    Where we are: EUR/USD trades at 1.1646, down 0.05% on the day, caught between 1.1625 and 1.1656. Fiber remains below the prior NY close, with momentum favoring a retest of the lower end of the range. The pair is struggling to hold ground against a broadly firming dollar as markets handicap the divergence between ECB and Fed policy.

    What’s driving it: The mildly dovish ECB bias is weighing on the Euro, particularly with wage tracker data softening and services HICP hovering near 3%. While a fresh energy spike or a re-acceleration in services inflation could deter a follow-up rate cut at the June 5th meeting, the market is leaning towards further easing. This comes as data from France and Spain showed higher-than-expected inflation, potentially bolstering the case for ECB hawks. Rising US yields alongside a stronger DXY are adding to the downside pressure on the single currency.

    • The German 2-year Schatz yield has edged down 2bp to 2.550% showing that investors are pricing in more easing.
    • ECB research highlighting the potential for an Iran war impact to “doubly scar” Eurozone consumers underscores the fragility of the economic outlook.
    • Speculator positioning in the Euro is modestly long, with net non-commercial positions at +33,513 contracts, around the 12th percentile, but this positioning is well off recent highs and not indicative of any near-term squeeze.

    NY session focus: Focus now turns to any further reaction to the higher Eurozone inflation numbers reported overnight. Keep an eye on any surprises from US data, though the main event is behind us. The US-DE 10Y yield spread at +149bp continues to favor USD strength and offers a good indication as to where the pair will go if the risk bid takes a breather. Watch for a break below 1.1625, which could trigger a run towards 1.1600. The pain trade is a surprisingly hawkish signal from an ECB speaker, igniting a short squeeze to 1.1700.

  • Cable Pressured by Bailey’s Dovish Undertones – Friday, 29 May

    Where we are: GBP/USD trades at 1.3428, down 0.12% on the day, within a tight 1.3409-1.3450 range. The pair is struggling to hold gains after a brief push higher in early European trading. We remain below yesterday’s New York close, suggesting continued downward pressure.

    What’s driving it: Governor Bailey’s remarks this morning are weighing on Sterling, reinforcing the Bank of England’s cautious stance. Bailey suggested tolerance for inflation above the 2% target given the soft real economy. This dovish tilt comes despite recent CPI figures that show inflation remains sticky, particularly in the services sector, and resilient wage growth that is keeping the MPC from signalling a clear cutting cycle. The dollar is catching a bid, with DXY at 99.01 (+0.07%), which adds further pressure on Cable.

    • Bailey’s tolerance for above-target inflation signals a potential delay in rate hikes, contrasting with earlier expectations.
    • UK unemployment rate ticked up to 5% in February, a lagging indicator of economic slowdown.
    • CFTC data shows a crowded short GBP positioning (-64,307 contracts, 15th percentile), suggesting squeeze potential on any positive surprise.

    NY session focus: Traders will be watching for any further reaction to Bailey’s comments. Focus remains on how resilient the US economy feels into the close. US 2s10s curve is +46bp. Key levels to watch are 1.3400 for support and 1.3450 as intraday resistance. The trade that’s working is fading Cable rallies. The crowded short positioning presents a notable squeeze risk if the BoE rhetoric pivots hawkishly. The pain trade is a hawkish Bailey U-turn and a sustained break above 1.3500, triggering short covering.

  • USD/JPY Momentum Stalls Near 159.30; Intervention Risk Looms – Friday, 29 May

    Where we are: USD/JPY is trading at 159.27, hovering just above the overnight low of 159.20 and below the overnight high of 159.38. The pair remains close to levels that triggered suspected intervention in late April, fueling caution among traders. The current level is marginally higher versus yesterday’s NY close.

    What’s driving it: The slow normalisation bias at the Bank of Japan continues to weigh on the Yen. While Ueda has flagged a willingness to hike further if the outlook tracks projections, the market remains unconvinced of aggressive action. The fact that wage data from the spring shunto consolidates the case for one more hike this year has given only a marginal boost. The risk of intervention by the Ministry of Finance and the BoJ looms large, especially with USD/JPY lingering above prior intervention zones; the Finance Minister has already warned about excessive volatility, raising communication risk.

    • The 2Y JGB yield is slightly higher at 1.364%, up 1bp on the day, offering limited support to the Yen.
    • Speculative positioning remains crowded short in JPY, with net non-commercial positions at -93,905 contracts, near the 4th percentile of its 52-week range, raising squeeze risk.
    • The US-JP 10Y yield spread remains wide at +178bp, favouring USD over JPY.

    NY session focus: The US data calendar is light today, placing greater emphasis on risk sentiment and USD dynamics. Watch DXY, currently at 99.01, and US 10Y yields, currently at 4.439%, for direction. A break above 159.40 in USD/JPY could trigger further short covering, while a sustained move below 159.00 might signal increased intervention risk. The working trade is still fading Yen strength. The at-risk trade is pressing USD/JPY longs into the weekend given intervention risk. The pain trade is a surprise BoJ announcement or a coordinated G7 intervention.

  • Loonie Weakens as Domestic Data Disappoints – Friday, 29 May

    Where we are: USD/CAD currently trades at 1.3825, up 0.29% on the day, testing the upper end of its intraday range of 1.3778-1.3830. The pair is breaking higher after consolidating around the 1.3800 level in early European trade. This move extends the recent weakness in the Canadian Dollar, bringing it to six-week lows.

    What’s driving it: The Canadian Dollar is under pressure as domestic data continues to paint a softer picture. Macklem’s comments following the April 16th meeting indicated an easing bias contingent on data. The anticipated 08:30 ET GDP print is expected to show a further slowdown in m/m growth from 0.2% to 0.1%. Meanwhile, US economic resilience and expectations of further Fed hikes are supporting the US Dollar, magnifying the impact on USD/CAD.

    • The Canadian 2-year yield has decreased by 4bp d/d to 2.789%, reflecting reduced expectations of further BoC rate hikes.
    • WTI Crude is trading lower, currently at 87.28, down 1.59%, weighing on the commodity-linked Loonie.
    • Speculators remain modestly short CAD, with net non-commercial positions at -31,231 contracts, leaving the currency potentially vulnerable to a short squeeze if incoming data surprises to the upside.

    NY session focus: All eyes are on the 08:30 ET Canadian GDP m/m release. A downside surprise could trigger a further spike in USD/CAD toward 1.3850, while a print above 0.2% could see a retest of the 1.3775 level. Watch for DXY reactions around the 99.00 level, as any further strengthening will exacerbate CAD weakness. The trade that’s working is shorting CAD against USD. The trade at risk is fading this move too early. The pain trade is a surprise jump in Canadian GDP, triggering a sharp CAD rally and squeezing existing short positions.

  • Aussie Bids on Copper Strength, RBA Caution Lingers – Friday, 29 May

    Snapshot: AUD/USD trades at 0.7176, up 0.15%, buoyed by firmer copper prices (down only -0.32% despite broader risk-off signals). RBA reluctance to signal cuts, despite easing inflation and spending, remains the dominant driver; all eyes will be on next week’s GDP figures for confirmation of the macro trend.

    • Watch 0.7200 as potential resistance, a break of which could signal a more sustained rally.
    • Squeeze risk is elevated given the crowded long positioning (98th percentile), making AUD vulnerable to any hawkish surprises elsewhere or further commodity wobbles.

    Bias into NY: Mildly bullish above 0.7150 as long as copper holds its ground; however, the crowded positioning and RBA’s hawkish lean leave AUD/USD susceptible to a downside correction if US yields gain traction.

  • Swiss Franc Remains Under Pressure Amid SNB Easing Bias – Friday, 29 May

    Snapshot: USD/CHF trades at 0.7819, down -0.27% on the session, as the SNB’s active easing posture continues to weigh on the Franc. Recent SNB balance sheet data released this morning reinforces the central bank’s commitment to managing currency strength.

    • Watch for continued pressure on the CHF as the SNB maintains its negative-rate optionality and FX intervention readiness. A break above 0.7847 would suggest a temporary reprieve.
    • Risk: Geopolitical tensions highlighted by the Trump administration’s stance on Oman could create haven demand for the CHF, providing unexpected support.

    Bias into NY: Expect continued USD/CHF upside toward 0.7850, driven by the SNB’s dovish stance and the wide US-CH 10Y yield spread of +405bp, even as US futures show mixed signals. This morning’s SNB balance sheet data reinforces the easing narrative.

  • Kiwi Surges on Rate Hike Expectations – Friday, 29 May

    Snapshot: NZD/USD is trading at 0.5977, up 0.74% on the session, boosted by growing expectations of a rate hike by the RBNZ. Governor Breman’s recent comments reinforced the view that interest rates may need to increase amid persistent inflationary pressures. No key New Zealand data is slated for release ahead of the NY close.

    • Watch for resistance around the 0.5980 intraday high; a break above could open the door to further gains.
    • Risk: A stronger-than-expected DXY above the 99.15 intraday high could temper the Kiwi’s advance.

    Bias into NY: Bullish on NZD/USD while markets continue to price in an 80% chance of a July rate hike, targeting a move towards 0.6000. Firmer risk sentiment, reflected in the Nikkei’s +1.79% rally and FTSE’s +0.61% gain, is providing additional support.

  • NY Session Tactical Brief – Thursday, 28 May

    Regime: Risk-off, driven by rising Mideast tensions and a flight to safety, reflected in falling US yields and a VIX above 17.

    Today’s market themes:

    • Oil supply scare: Geopolitical risks in the Black Sea and Middle East fuel concerns over energy supply, boosting crude prices.
    • Core PCE watch: Markets brace for key US inflation data, which could dictate the Fed’s near-term policy path.
    • Crowded shorts at risk: GBP, JPY and Nasdaq are crowded short based on the CFTC positioning.

    The setup: Rising geopolitical risks are pushing investors into safe-haven assets, weakening equities and boosting oil. Focus is on the 08:30 ET Core PCE print. A surprise to the upside could trigger a risk-off move, whereas a downside surprise could trigger a rally. US 10Y is at 4.479%.

    Watch list (native time per event):

    • 14:00 NZT NZD: Annual Budget Release (Medium)
    • 08:30 ET USD: Core PCE Price Index m/m (High) forecast 0.3%, prior 0.3%
    • 08:30 ET USD: Prelim GDP q/q (High) forecast 2.0%, prior 0.7%

    Bias by asset:

    STRICT SILO RULE: For every non-USD asset, the Domestic line MUST contain only domestic content (home central bank / domestic data / domestic yield / domestic political-fiscal driver). USD, DXY, Fed, US yields, and risk regime go in the Cross line — never in Domestic. If no fresh domestic catalyst exists, write “No fresh domestic catalyst — sensitive to US response” in Domestic. For commodities, Domestic = real-yields / supply / inventories / flows. For BTC, Domestic = funding / ETF flow / on-chain.

    • DXY:
      • Direction: Neutral to slightly lower.
      • Domestic (US): Fed policy dependent on PCE; US yields are key.
      • Cross: Risk-off flows provide some support; but geopolitical tension is negative.
      • Levels: Support at 99.11, resistance at 99.50.
    • EUR/USD:
      • Direction: Neutral.
      • Domestic (EU): Lagarde’s commentary; Bund yields stable; watching sovereign spreads.
      • Cross: DXY weakness offsetting risk-off; US-DE 10Y spread supportive.
      • Levels: Resistance at 1.1640, support near 1.1585.
    • GBP/USD (Cable):
      • Direction: Neutral to bearish.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength limiting upside; risk-off sentiment hurts Cable.
      • Levels: Resistance at 1.3430, support at 1.3370.
    • USD/JPY:
      • Direction: Neutral to bullish.
      • Domestic (JP): Intervention risk remains high; JGB yields capped by BoJ.
      • Cross: US 10Y still above 4.45%; DXY support; risk-off may trigger unwinds.
      • Levels: Support at 159.30, resistance near 159.65.
    • USD/CAD (Loonie):
      • Direction: Neutral to bullish.
      • Domestic (CA): WTI price support; BoC likely on hold in June.
      • Cross: DXY strength; US-CA 10Y spread holds.
      • Levels: Support around 1.3835, resistance near 1.3870.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): RBA likely to pause; iron ore volatility.
      • Cross: DXY strength; China growth concerns.
      • Levels: Resistance at 0.7145, support around 0.7100.
    • NZD/USD (Kiwi):
      • Direction: Neutral.
      • Domestic (NZ): Annual budget release; RBNZ expectations muted.
      • Cross: DXY strength limiting upside; risk-off sentiment weighs.
      • Levels: Resistance near 0.5910, support around 0.5865.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB easing bias; Swiss yields suppressed.
      • Cross: Safe-haven demand into USD; DXY strength.
      • Levels: Support at 0.7865, resistance near 0.7900.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Bearish; GBP/JPY: Bearish.
      • Domestic: ECB vs BoE, BoJ; relative yields.
      • Cross: DXY impact on each leg; risk-off impacting JPY crosses.
      • Levels: Monitor range breaks from current levels.
    • XAU (Gold):
      • Direction: Bullish.
      • Domestic (asset-specific): Falling real yields supporting; breakevens stable.
      • Cross: Risk-off flows; DXY.
      • Levels: Support near 4400, resistance at 4490.
    • XAG (Silver):
      • Direction: Neutral.
      • Domestic (asset-specific): Industrial demand, Gold-Silver ratio monitoring.
      • Cross: DXY and risk appetite dictate direction.
      • Levels: Support near 7200, resistance at 7500.
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): Supply concerns, OPEC policy, EIA data.
      • Cross: Risk-off bid; DXY.
      • Levels: Monitor for breakouts above $93.00 and $96.00 respectively.
    • Copper:
      • Direction: Neutral.
      • Domestic (asset-specific): China demand, LME stock levels, supply side constraints.
      • Cross: Global growth concerns.
      • Levels: Support near $624.00, resistance near $636.00.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Fed policy / US yield reaction; earnings season ongoing.
      • Cross: VIX spikes on geopolitical concern; risk-off tone prevails.
      • Levels: S&P fut: resistance at 7557, support at 7505.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Mega-cap earnings; real yield sensitivity on long-duration assets.
      • Cross: Rates sensitivity and elevated VIX.
      • Levels: Resistance at 30135, support near 29765.
    • US30 (Dow):
      • Direction: Bearish.
      • Domestic (US): Cyclical tone; yield movements influencing industrial/financial sectors.
      • Cross: Bond yield reaction.
      • Levels: Resistance at 50819, support at 50576.
    • UK100 (FTSE):
      • Direction: Bearish.
      • Domestic (UK): Sterling weakness; Gilt yield reactions.
      • Cross: Global risk; US market sentiment dampening performance.
      • Levels: Resistance near 23390, support around 23190.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): Bund yields; ECB rhetoric; IFO / ZEW.
      • Cross: US tech weakness impacting; DXY.
      • Levels: Resistance at 25175, support at 24995.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): JPY moves, JGB yields, BoJ comments influencing sentiment.
      • Cross: US tech pressure impacting; overall risk tone.
      • Levels: Resistance near 65165, support around 63880.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Funding rates, ETF flows, and on-chain data under pressure.
      • Cross: DXY is supportive but broader risk-off pulls it down.
      • Levels: Resistance near 74500, support around 72500.

    Positioning watch: CFTC data shows crowded shorts in GBP, JPY and Nasdaq and crowded longs in AUD, Copper and Bitcoin. Any positive surprise from economic data (especially the US PCE) or easing of geopolitical tensions could trigger a short squeeze in GBP, JPY and Nasdaq.

    The pain trade: A weaker-than-expected Core PCE print would trigger a relief rally in risk assets, squeezing shorts in GBP, JPY and Nasdaq, and pressuring the DXY and pushing real-rates lower.

  • DXY Drifts Lower as Markets Await Key Data – Thursday, 28 May

    Where we are: The DXY currently trades at 99.13, down 0.13% on the day, holding above the session low of 99.11 but well off the overnight high near 99.50. Dollar weakness has been broad-based as the index retreats from recent seven-week highs. US 2 and 10 year yields are slightly lower, reflecting a cautious tone ahead of the US data dump.

    What’s driving it: The near-term dollar direction hinges on this morning’s US data deluge, with the Core PCE Price Index at the forefront. The Fed remains firmly in a patient hold, and a hot PCE print would fuel speculation of a policy misstep and further delay rate cut expectations, supporting the Greenback. Fed officials, including Jefferson, have recently reiterated concerns about inflation risks, particularly from energy price surges, reinforcing the data-dependent stance. Firmer crude is likely exacerbating these concerns; WTI is holding above $112/bbl.

    • The 10-year Breakeven Inflation rate sits at 2.39%, suggesting inflation expectations remain relatively well-anchored ahead of the PCE print.
    • US 2Y yields are trading down to 4.049%, suggesting a slightly dovish tilt ahead of the data.
    • Speculator positioning remains modestly short the USD (-479 contracts), leaving room for a potential squeeze if data surprises to the upside.

    NY session focus: All eyes are on the 08:30 ET releases: Core PCE Price Index, Prelim GDP, GDP Price Index, and Unemployment Claims. A hotter-than-expected PCE would likely send the DXY towards 99.50 and potentially test the 99.80 resistance level. A weaker print could see a test of 98.80. New Home Sales at 10:00 ET will provide further insight into the housing market’s resilience. The trade at risk is short USD/JPY, as a hawkish repricing could fuel a significant rally. The pain trade is a surprisingly dovish print followed by a recovery in risk sentiment, pushing the DXY towards the lows of the week.

  • Euro Bounces from Lows, Awaits US Data – Thursday, 28 May

    Where we are: EUR/USD is currently trading at 1.1635, up 0.06% on the day after bottoming at 1.1586. The pair is trading within a relatively tight intraday range of 1.1586-1.1638, struggling to gain meaningful traction after an early dip. It remains to be seen if it can close above yesterday’s New York close.

    What’s driving it: The mild easing bias preserved by the ECB, even after last month’s 25bp cut, continues to weigh on the single currency. The market is weighing the probabilities of a follow-up cut in June, balancing softening wage trackers and services HICP against the risk of re-accelerating services inflation or fresh energy spikes. The modest bounce is likely driven by profit-taking after the dip and a slightly softer DXY; however, the US-DE 10Y spread at +149bp is not helping.

    • The ECB minutes from the April meeting were released this morning at 11:30 CET, but are unlikely to contain any surprises following the press conference.
    • German 2-year Schatz yields are down 2bp to 2.597%, while the 10-year Bund is also down 2bp to 2.990%, flattening the curve slightly.
    • Speculative positioning in EUR remains modestly long, but is at only the 12th percentile, suggesting limited scope for a major squeeze. However, that also points to limited conviction.

    NY session focus: The main event risk today is the US data dump at 08:30 ET, including Core PCE, Prelim GDP, GDP Price Index, and Unemployment Claims. Expect volatility around the releases. A hotter-than-expected Core PCE would likely pressure EUR/USD back towards the day’s lows and potentially break 1.1580. Conversely, a weaker GDP print would likely fuel a rally toward the 1.1650-1.1700 area, challenging the upper end of the recent range. Watch for Lagarde’s speech at 09:10 CET for any subtle shifts in tone, although policy communication is usually reserved for post-meeting press conferences. The pain trade would be a string of weaker US data pushing EUR/USD decisively above 1.1700, squeezing any remaining shorts.

  • Pound Pressured by UK Rate Cut Bets – Thursday, 28 May

    Where we are: GBP/USD trades at 1.3422, down a touch (-0.04%) after a relatively quiet overnight session with a range of 1.3368-1.3431. Cable remains below yesterday’s NY close despite a weaker DXY. The near-term picture is skewed towards further downside without a hawkish catalyst. The 1.3400 level is key for near-term direction.

    What’s driving it: The dominant driver continues to be the growing expectation of a Bank of England rate cut, as reflected by Dhingra’s dissenting vote at the last meeting. The market increasingly believes the BoE will be forced to ease, regardless of the MPC’s cautious stance, especially if upcoming data confirm the downside trend in inflation and wages. While the UK 2s10s curve remains relatively steep at +58bp, any flattening would signal a greater conviction in earlier BoE easing. The weaker DXY, currently at 99.13, is providing limited support to Cable.

    • Dhingra’s persistent call for cuts, bucking the wider MPC consensus, is fuelling dovish speculation.
    • April’s CPI figures, while still above target, showed a significant drop from previous levels, reinforcing expectations of further disinflationary pressure.
    • Speculative positioning remains heavily short GBP, at the 15th percentile, suggesting a potential squeeze higher on any positive surprise.

    NY session focus: Today’s US data deluge at 08:30 ET, including Core PCE, GDP, and Unemployment Claims, will be crucial for setting the tone. Strong US numbers could further pressure Cable by widening the US-UK 10Y yield spread (-37bp currently). A break below 1.3400 opens the door to a test of the overnight low at 1.3368, while a rally above 1.3431 targets 1.3450/60. The trade at risk is short GBP/USD given deeply negative positioning, while a dovish BoE repricing is the working theme. The pain trade is a surprise hawkish shift from the BoE pushing Cable back above 1.3500.