• Off 0.1% at the base of a 1.0846-1.0862 range with the U.S. dollar up 0.1%

• Modest risk-off, with regional stocks, and e-minis lower, UST yields firmer

• German inflation and consumer sentiment will gauge it's economic health

• Charts - momentum studies flat-line, as 21-day Bollinger bands contract

• Mixed 5, 10, & 21-day moving averages - signals show a neutral setup

• A close below the 1.0810 21-day moving average would be a bearish signal

• 1.0810 21-DMA and Tuesday's 1.0889 top are initial support/resistance

• 1.0835/40 1.518 BLN and 1.0875/80 2.327 BLN close strikes for May 29th

For more click on FXBUZ

Synopsis:

Goldman Sachs anticipates that substantial depreciation of the US Dollar may be unlikely prior to the upcoming US elections, based on patterns observed in 2016 and the current economic outlook.

Key Points:

• Historical Pattern: Reflecting on the 2016 elections, portfolio flows did not heavily favor markets with improving growth, suggesting a similar trend may occur this election cycle.
• Economic Outlook: The strong performance of the US economy is expected to continue supporting the Dollar.
• Election Risks: Upcoming election risks are likely to influence market sentiment and currency stability.
• Inflationary Catalysts: Potential new inflationary triggers, such as tariffs or increased fiscal spending, could drive the Dollar stronger.

Conclusion:

Goldman Sachs forecasts that the Dollar will maintain or even enhance its strength relative to other currencies in the months leading up to the US elections. This stability is attributed to solid economic fundamentals and heightened market cautiousness due to electoral uncertainties.

• AUD/USD races to 0.6665 day high on higher-than-expected April CPI

• AU April CPI rises to 5-month high of 3.6% vs.3.4% expected

• RBA rate expectations pushed back as inflation remains sticky

• First easing now not fully priced in until Sep 2025; was July earlier

• AUD fails to hold gains but downside limited; support 0.6625-30, 0.6600-05

• Resistance 0.6680-85, 0.6710-15; Asia range 0.6636-0.6665

• A broad 0.6550-0.6750 range forms as Fed, RBA maintain status quo on rates

• For more click on FXBUZ

• AUD/USD under pressure as USD stays broadly bid; JPY at lowest since May 1

• Undermined by firm U.S. yields which hover near multi-week peaks

• Persistent U.S. inflation concerns, improved consumer confidence weigh

• Fed officials reiteration of higher-for-longer rate stance underpins USD

• Australia CPI Wednesday key for RBA rate expectations

• AU monthly consumer prices expected to dip to 3.4% from 3.5% in March

• Support 0.6625-30, 0.6600-05, resistance 0.6680-85, 0.6710-15

• For more click on FXBUZ

• -0.05` after closing off 0.1% with the U.S. dollar up 0.05%

• Sterling jumped to 1.2801 in London after strong retail sales

• Then fell back as the USD climbed with rising Treasury yields

• There are no major UK data or BoE events, so the USD and risk lead GBP

• Charts; neutral daily momentum studies - 5, 10 & 21 DMAs climb

• 21-day Bollinger bands move higher - a strong positive trending setup

• Tuesday's 1.2801 top and the 1.2893 2024 high are the major resistances

• Close below the 1.2723 10-day moving average would be a warning to longs

For more click on FXBUZ

• -0.05% after closing flat with the U.S. dollar closing up 0.05%

• Spiked to 1.0889 in Europe, then retreated as UST yields climbed

• Yield spreads widened, 10yr bund +4bp 2.589%, 10yr UST +7bp 4.542%

• Inflation expectations eased in Europe, supporting a June ECB cut

• Charts - momentum studies flat-line, as 21-day Bollinger bands contract

• Mixed 5, 10, & 21-day moving averages - topside failure left a neutral setup

• A close below the 1.0810 21-day moving average would be a bearish signal

• 1.0810 21-DMA and Tuesday's 1.0889 top are initial support/resistance

• 1.0835/40 1.518 BLN and 1.0875/80 2.327 BLN close strikes for May 29th

  For more click on FXBUZ

Changes day of fireside chat in last bullet

• AUD/USD opens 0.1% lower as U.S. yields jump on weak bond sales

• Persistent U.S. inflation concerns, improved consumer confidence weigh

• Fed's Kashkari wants significant progress on inflation before rate cuts

• Australia CPI Wed, U.S. core PCE price index Fri key for rate expectations

• AU monthly consumer prices expected to dip to 3.4% from 3.5% in March

• RBA higher-for-longer rate stance to stay unless inflation cools markedly

• A broad 0.6550-0.6750 range forms as Fed, RBA reiterate status quo on rates

• Support 0.6625-30, 0.6600-05, resistance 0.6680-85, 0.6710-15

• Tue range 0.6679-0.6643; RBA Assistant Governor Hunter fireside chat Thu

• For more click on FXBUZ

Synopsis:

ING discusses the potential for a rise in EUR/GBP from current levels, emphasizing the influence of monetary policy divergence between the European Central Bank (ECB) and the Bank of England (BoE). Despite recent dovish comments from the ECB and upbeat risk sentiment, ING sees a favorable setup for EUR/GBP due to shifts in monetary policy expectations.

Key Points:

• Monetary Policy Divergence: The primary driver for EUR/GBP remains the monetary policy divergence between the ECB and the BoE. ING anticipates this divergence may soon favor the euro, supporting a potential rally in EUR/GBP.
• Current Market Dynamics: After touching lows below 0.8500, EUR/GBP showed resilience, suggesting the market is hesitant to drive the pair lower amid a split BoE MPC and volatile inflation and wages data.
• Political Influence: The upcoming UK political developments, particularly any campaign statements from Labour Party leader Keir Starmer, are monitored but have yet to impact the market significantly.

Conclusion:

With a relatively quiet UK economic calendar this week, EUR/GBP's movements are likely to be influenced more by shifts in policy expectations rather than immediate economic data or political comments. ING maintains a view that upcoming economic indicators will bolster the case for a BoE rate cut in August, potentially driving EUR/GBP higher in the near term.

• NY opened near 1.0875 after 1.08555 traded on EBS overnight, rally extended

• Lower US yields, equity ESv1 & gold XAU= gains helped drive EUR/USD up

• 1.0889 hit, sellers emerged as US$ buying ensued, yields US10YT=RR rallied

• EUR/USD dropped to 1.0858 then neared 1.0870 late, traded up +0.12%

• Techs are bullish; RSIs imply upward momentum in place, 10-DMA lends support

• German June GfK consumer sentiment, French May consumer confidence due Wed.

• For more click on FXBUZ

• AUD/USD's overnight rally extended in NY's morning, pair opened near 0.6660

• Lower US yields US2YT=RR, commodity HGv1XAU= gains helped buoy AUD/USD

• A 4-session high of 0.667959 traded but sellers emerged & gains eroded

• Yields, US$ turned upward while stocks ESv1 slid & USD/CNH rallied

• AUD/USD fell back below the 10-DMA & turned slightly negative on the session

• Pair sat near 0.6654, traded down -0.001% late in the session

• Daily gravestone doji formed, is a concern for AUD/USD longs

• Australia April CPI is a data risk in the Asia session

• For more click on FXBUZ

• GBP/USD flat at 1.2770 in NorAm afternoon, Tuesday range 1.2801-1.2762

• Early rise to 9-wk high above 1.28 hints market tipped to further gains

• UK rate expectation on a decidedly more hawkish path post-CPI

• Sterling appears set to keep the rally going nL1N3HV1E5

• STIRs price 6% odds for Jul, 40% odds for Aug UK cut; Fed 54% for Sep cut

• GBP$ supt 1.2762 Tues low, 1.2717 rising 10-DMA, 1.2676 May 24 low

• Res 1.2801 Tues high, 1.2803 Mar 21 high, 1.2860 200-DMA, 1.2894 Mar 8 2024 high

Synopsis:

MUFG continues to support a long position on EUR/USD, targeting a move towards 1.1050. The bank's analysis suggests a more balanced rate cut trajectory between the ECB and the Fed than the market currently anticipates.

Key Points:

• Yield Spread Dynamics: Initially, yield spreads indicated a growing policy divergence favorable to the US, which has recently reversed, aiding the EUR/USD recovery.
• Market Perception vs. Reality: Despite prevalent market expectations of increased divergence with the US potentially favoring further dollar strength, MUFG counters this view, suggesting a closer alignment in policy trajectory between the ECB and the Fed.
• ECB and Fed Rate Cuts: The ECB is expected to cut rates in June but may pause in July. Both central banks are anticipated to have similar rate-cut paths post-summer, with three reductions each this year.

Conclusion:

MUFG’s stance is based on a reevaluation of the expected policy paths for both the ECB and the Fed, suggesting that the market may have overestimated the potential for divergence. This reassessment supports the firm’s strategy to remain long on EUR/USD, expecting the pair to approach 1.1050 as the year progresses.

Removes duplicative word from headline

• USD/JPY is down 0.19% and inside Thur's 156.53-7.19 for a third day

• That day's lows are backstopped by the 10-DMA and kijun at 156.27/05

• As well as the May 22 low at 156.12 and ongoing option expiries at 156

• Last week's strong US S&P PMI couldn't keep Tsy ylds, USD up this week

• Dollar broadly softer since last Thur, with Tsy-JGB ylds spreads weaker

• Those spreads remain attractive and spec bought last Tues-Tues's dip

• US house prices came in softer than expected, signs high rates hitting

• Have May consumer confidence and more Fed speakers due today

• But Fri's PCE data is well awaited, if also well informed by prior data

• Core PCE is f/c again up 0.3% m/m and 2.8% y/y; not big news if on f/c

• Might have to wait for next week's ISMs, JOLTS and NFP for major news

• Fed not highly favored to cut until Nov. 7, after US election

• BoJ priced to hike 10bp in July and Oct, 26bp by year-end

• But Japan CPI, underlying and corporate inflation data remain mixed

• Not a glaring green light for rapid tightening other than for yen support

For more click on FXBUZ

Synopsis:

BofA advises caution against pursuing the recent USD sell-off, despite a structural bearish outlook on the USD by end-2024. They highlight a combination of US economic resilience and a cautious Fed stance as key factors tempering the immediate downside risks for the USD.

Key Points:

• US Economic Resilience: Despite recent negative data surprises, the US economy shows continued resilience, reducing the likelihood of near-term Fed rate cuts.
• Fed's Cautious Stance: The Federal Reserve's reluctance to indicate imminent rate reductions supports the holding power of the USD.
• Impact of China’s Policy: While China’s policy adjustments could potentially weaken the USD by boosting global import demand, the effects are uncertain, and the timeline is unclear.

Conclusion:

BofA recommends a cautious approach towards the current USD sell-off, suggesting that the structural bearish outlook for the USD towards the end of 2024 does not warrant aggressive short positions in the short term. This is due to ongoing US economic strength and a conservative Fed, combined with uncertainties in the global economic landscape.

• Sterling knocking on the door of 1.2800 and our short stop, 1.2810, at risk

• Three advancing candles, white knights, strengthening GBP's grip

• Initial resistance at 1.2803, March 21 high

• The big bull target is at 1.2893, the March 8 high point

• Daily momentum and RSI are over bought but no sign of a pullback

• On a correction support is at 1.2720, 10-day moving average

  For more click on FXBUZ

Synopsis:

Credit Agricole's month-end fixing model suggests moderate USD selling across various currencies due to May's equity and FX market performances. The most significant selling pressure is expected against the Japanese yen.

Key Points:

• Equity Market Performance: Global equity markets showed an overall improvement in May, influencing FX dynamics.
• USD Performance: The USD experienced general weakness throughout the month, aligning with the trends seen in equity markets.
• Rebalancing Flows: Adjustments for market capitalization and the month's FX performance indicate that portfolio rebalancing will likely involve moderate USD selling.
• Strongest Sell Signal: The model identifies the strongest sell signal against the JPY, indicating a notable shift in USD/JPY positioning.

Conclusion:

According to Credit Agricole's predictions, the end of May will witness targeted USD selling, particularly against the JPY, as markets adjust to recent movements in global equity and FX markets. This rebalancing reflects broader market trends and investor strategies for the month.

Synopsis:

Barclays’ latest month-end fixing model forecasts significant USD selling pressure as the month concludes. This projection is based on recent market reactions to U.S. economic data and the resulting need for portfolio rebalancing.

Key Points:

• Recent U.S. Data and Market Response: Slightly softer U.S. economic data in May, particularly PPI, CPI, and retail sales, have led to a rally in bonds and stocks reaching new highs.
• Rebalancing Needs: These market movements are expected to trigger significant dollar-selling activities to rebalance portfolios by the end of the month.
• Broad-Based Signal: According to Barclays' proprietary model, this strong dollar-selling indication is consistent across G10 currencies, influenced heavily by large market cap movements in U.S. equity markets.

Conclusion:

Barclays predicts a pronounced selling of USD at this month's end, primarily driven by rebalancing needs following recent shifts in U.S. market dynamics. This trend reflects broader adjustments within global financial portfolios.

• AUD/USD rallied 0.6654-0.6674 overnight, NY opened near 0.6665, up +0.17%

• Softer US yields US2YT=RR weighed on US$ to help the pair's rally

• Commodity HGv1, DCIOc2, equity ESv1 gains also added to buoyancy

• AUD/USD rallied above the 10-DMA and struck a 4-session high

• Techs lean bullish; RSIs rising & a rally follows April's monthly doji

• US May CaseShiller housing data & consumer confidence are data risks in NY

• Remarks from Fed's Kashkari, Cook may impact risk sentiment Tuesday

• For more click on FXBUZ

• Potential rounding top on the daily chart

• However, ranges are extremely tight and clouding near-term direction

• We are maintaining a long from 155.25 for 165.00 but at risk of pullbacks

• Key support at the 10-day MA, today at 156.30

• Sharp drop in 14-day positive momentum: RSI levelling off near o/b levels

• Climb above recent 157.19 needed to trigger a bullish resumption

for more click on FXBUZ

• USD/JPY muted, holding pattern is the current state of play

• Lack of directional clues from USTs with 10yr capped at 4.5-4.53%

• USD/JPY longs likely skittish ahead of suspected intervention level (157.50)

• Nonetheless, dips in the pair remain shallow amid preference to own carry

• Reminder, corporate month-end due Wednesday - typically USD supportive

• Though, this has been less so in recent months

• Support: 156.27-45 (200-hour SMA/EMA)

• Fed rate cuts increasingly looks like a one and done in 2024 nL1N3HR0PV

• BUZZ-IMM net JPY short rises for first time in four weeks nL1N3HV0F1

For more click on FXBUZ

• EUR/USD +0.2%, trades in line with yield spreads, thus fairly valued

• Recent May 16 high (1.0895) marks resistance

• Meanwhile, $2.5bln option expiry at 1.0900-10 also a possible cap

• Support: 200-hour EMA/SMA (1.0841-53)

• Expected month-end FX rebalancing points to strong USD selling nL1N3HU0CZ

• German CPI (May 29) in focus as ECB cuts are priced out 0#ECBWATCH

• ECB June cut a done deal, but markets now see two cuts vs three previously

For more click on FXBUZ

• Cable has traded a 15 pip range thus far Tuesday; 1.2768-1.2783

• 1.2783 is high since March 21. 1.2768 is seven pips above last week's peak

• Pound supported by expectation of another BoE rate hold on June 20

• More than 100 business leaders back Labour Party ahead of UK election

• Labour is expected to win majority of seats on July 4 nL8N3H44A6

• CFTC data showed flip to net GBP long before hotter than expected CPI data

• Our long is comfortably in play as price lifts from the 100DMA, 1.0813 EBS

• Daily-monthly RSIs are rising and the pair traded above the 10-DMA Friday

• A bull flag continuation pattern has played out on the daily chart

• Completion of that pattern suggests the rally off April's low has resumed

• Resistance points at 1.0895, 1.0942 and 1.0980, stand out 2024 highs

• The bull target remains 1.0960 with a stop at 1.0785

  for more click on FXBUZ

• May 22/23 long upper candle shadows cancelled out

• Back to back gains and a resumption of the underlying bull run

• March 21 1.2803 high the next bull target

• Retracement levels off the 1.2893-1.2299 drop all removed

• Our 1.2720 short play stop looming large just above 1.2800

• Daily momentum and RSI readings are in over bought territory

• There is a late June below mkt cloud twist but too far out for our short

  For more click on FXBUZ