EUROPEAN FX UPDATE: DXY firmer, JPY benefits post-Tokyo CPI

DXY: +0.3%, 99.49

• DXY is on a firmer footing today as traders digest a slew of trade-related updates on Thursday/overnight; more details below, but in essence US Officials generally pushed back against the severity of the latest ITC Court ruling, suggesting there are other ways to implement tariffs - do note that the US appeals court provided temporary reprieve to Trump's tariffs. Elsewhere, a meeting between US President Trump and Fed Chair Powell seemed to discuss economic developments but Powell refrained from discussing his expectations on monetary policy.


• Just to recap some of the key headlines; 1) US appeals court temporarily reinstated US President Trump's tariffs during the appeal and said it needs time to consider filings, 2) Trump admin is looking at a stopgap tariff regime if the court appeal against the tariff block fails, which would allow would allow tariffs of up to 15% for 100 days, via WSJ, 3) US Treasury Secretary Bessent said a couple trade deals are close and that China talks are a bit stalled but believes they will have more talks in a few weeks


• DXY currently trades in a 99.12-61 range and has held an upward bias throughout the European morning, but still very much towards the lower end of the prior day’s trading range. From a technical standpoint, 100.00 will be the next key resistance point and then its 21 DMA at 100.09 thereafter.


• Focus now turns to the monthly US PCE (Apr) figure later. The consensus expects headline PCE prices will rise +0.1% M/M in April (prev. 0.0%), with the annual rate falling to 2.2% Y/Y from 2.3%. The core rate of PCE is expected to also rise +0.1% M/M (prev. 0.0%), and the annual rate of core PCE is seen easing to 2.5% Y/Y from 2.6%.

EUR: -0.3%, 1.1340

• EUR is pressured and towards the bottom of the G10 performers list; pressure which seemingly stems from broader Dollar strength. There have been a number of key European data points today, but nothing that fundamentally changed the downward bias for the Single-Currency.


• The German Retail Sales report was mixed; the headline M/M was much weaker than expected whilst the Y/Y figure printed above expectations – do note that the priors were revised higher. Spanish Inflation metrics printed a little lower than expectations. The German State CPIs were mixed vs the mainland expectation implication – nationwide figure is due in the afternoon.


• For European-specific trade updates, Bessent suggested that the EU's deal is in motion. Elsewhere, the FT reported that Germany is eyeing a 10% digital tax on global tech giants like Meta and Google.


• EUR/USD currently trades towards the lower end of a 1.1328-1.1389 range; further downside could see a test of its 21 DMA at 1.1274. For reference, some very modest pressure in EUR/USD was seen following the Spanish inflation data, whilst it was little moved on Germany’s state metrics – focus in Europe now turns to the nationwide figure at 13:00 BST.

USD/JPY: -0.2%, 143.97

• JPY is currently the only G10 currency that is firmer vs the Dollar, largely thanks to the tepid risk tone and following a mostly firmer Tokyo inflation report overnight. To recap, headline Y/Y printed a little below expectations but the core and super-core figures beat consensus. BoJ Governor Ueda spoke overnight, saying that “we are aware of firms' aggressive price and wage setting behaviour continuing”, he also highlighted the uncertain nature of the economy.


• USD/JPY trades in a 143.45-144.21 range, currently sits just beneath the 144.00 mark. Upside levels include the 21 DAM at 144.76 and then the 50 DMA at 145.23 thereafter.

GBP: -0.1%, 1.3477

• GBP is modestly lower vs the broader Dollar strength but ultimately faring a little better vs peers. UK-specific updates today have been very light; focus on Thursday was on BoE’s Bailey who provided little by way of surprises – he reiterated a gradual monetary policy approach and highlighted the uncertainty surrounding the economy.


• Cable currently trading in a 1.3456-1.3510 range; further downside could see a test of Thursday’s low at 1.3415.

Antipodeans: AUD -0.3%, NZD -0.1%

• Antipodeans are lower but with clear underperformance in the Aussie, with downside facilitated by broader losses in the metals complex. For AUD specifically, it is pressured after the region reported a contraction in Retail sales.


• AUD/USD currently trading in a 0.6408-52 range, and ultimately trading on either side of its 21 DMA (0.6436) and 200 DMA (0.6445). The Kiwi is trading within a 0.5952-5989 range.

30 May 2025 - 09:55- ForexEU Research- Source: Newsquawk