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Forex Market Snapshot
The dollar is headng into month end on a softer note as it continues to feel the effects of yesterday’s risk off driven sell-off.
Regarding month end, I have observed that EURGBP (currently lower) tends is one of the more active flows with an an impact often seen on the respective GBPUSD (currently leading_ and EURUSD (lagging) pairs that make the cross.
GBP is currently the outperformer, followed by the CHf snd JPY. AUD is the main laggard.
Forex Market Snapshot
The dollar is trading on the firm side after selling following the FOMC saw limited follow through., CHF and JPY lagging as US yields dip along with softer crude oik prices.
- EURUSD:: On the defensive (while below 1.1150) ahead of the ECB decision.
- USDJPY: Bounce off a 157.60 low keeps 158 pivotal amid defense ahead of Friday’s BoJ meeting.
- GBPUSD: Clinging to a bid above 1.33 after a stop run below yesterday failed to follow through.
- USDCAD:: Back to unchanged as focus stays on pivotal 1.40 to set its tone after a bounce from just above its 1.3968 low (near double bottom)
- AUDUSD; Still bid above .7000 but again struggled to hold above .7050
Forex Market Snapshot
EURUSD: Unable to shake a focus from 1.12, currently trading below, as elevated French vs. German bond yield spreads and PMI misses (led by by France) weigh. 1.1150-80 needs to hold to keep the focus on 1.12 and away from the 1.1113 low. Event risk today: Moody’s French credit review (sometme after US markets close)
USDJPY: Remains on the defensive with the focus still on 157 (currently below it) after the overnight plunge paused just above 156. Watch US bond yields for any correlations.
GBPUSD: Retail Sales miss offset by PMI beat. Charts show a lower high off the 1.3419 top, making it dependent on 1.3350-55 holding to keep a bid and prevent down momentum from taking over. Note GBP lagging vs EUR duw to weak EURGBP.
USDX (US DOLLAR INDEX) 4 HOUR: Lagging indicator
On the defensive as the dollar side seems to be having more trouble absorbing the various cross flows. Key support is at 101.51 with a weaker EUR (e.g. EURGBP) making USDX more of a lagging than leading indicator. Note EUR represents 57.6% of the index.
Market Movers: UK inflation surprise, Meta and Tesla tonight
UK CPI rose 3.5% year on year in September, up from 3.1% in August and above the 3.4% consensus. That’s the highest rate since September 2023. Fuel prices were the main driver, and the print has firmed up expectations of a Bank of England rate rise. That keeps GBP crosses and gilt yields in focus.
How Currency Crosses Help You Find the Side to Trade
A forex chart shows where a currency pair is trading. It does not always explain why it is moving.
You might see GBPUSD rally while EURUSD barely changes. At another time, the euro falls while sterling rises, leaving traders who are focused on the dollar searching for an explanation.
One place to look is the currency crosses.
GBPUSD 4 HOUR: Path of least resistance
Supported by a weaker EURGBP, GBPUSD would need to establish 1.3400+ as support to open a void to 1.35+ (high 1.3409).
If not, potential for a lower top that needs to hold 1.3362 to avoid some down momentum although only sub-1.3298 would negate the risk to the upside.
Note market following the path of least resistance by selling EURGBP.
Forex Market Update: EUR crosses (
EUR is up modestly vs. the USD but down again on its crosses, most notably vs. the GBP (note French vs. German 10 year bond spread widens to 154bps).
Takeaway, Market is having more difficulty absorbing the USD sell side of the cross flows, most notably in GBPUSD (buying).
Forex Snapshot: Weaker EUR
EURUSD: 1.1182 (opening week gap lower)_ => 1.1235 (filled gap) => back to pivoting 1.12
EUR crosses: Weak crosses across the board, led bu EURAUD and EURCAD while EURGBP extending downtrend. Creating tug-of-war with USD (e.g. AUDUSD up, USDCAD down, EURUSD down on the day.
