EUROPEAN FX UPDATE: DXY pivots around 104, EUR and GBP digest PMIs, JPY weak

USD: DXY -0.%; 104.00

• DXY is lower after some choppy price action in early European trade. The macro narrative for the US has kicked the week off with a focus on the trade agenda. This follows weekend reporting that Trump is set to announce (April 2nd) widespread reciprocal tariffs on nations or blocs but is set to exclude some and the administration is currently not planning separate, sectoral-specific tariffs to be unveiled at the same event as Trump had once signalled. This would provide some relief for the market, albeit would ultimately lead to a deterioration in the global trade outlook. Today's docket is light on data but with Fed's Bostic and Barr due to speak. The main data highlight this week comes on Friday via monthly PCE metrics. DXY is currently tucked within Friday's 103.75-104.22 range.

EUR: EUR/USD +0.2%; 1.0840

• EUR saw some fleeting support in early European trade following French PMI metrics which saw all three key measures beat on expectations and improve from their priors. Thereafter, the German and Eurozone metrics showed a mixed trend whereby, manufacturing beat estimates and rose from the priors, services unexpectedly fell with composite improving but not by as much as expected. The accompanying report noted "while we should not be carried away by a single data point, it is noteworthy that manufacturers expanded their output for the first time since March 2023". Elsewhere, EUR is likely benefitting from the mild positivity on the trade front (see USD section for details). EUR/USD is currently contained within Friday's 1.0795-1.0861 range.

JPY: USD/JPY +0.2%; 149.56

• USD/JPY advanced from the APAC open to hit resistance just shy of the 150.00 handle with the early upside facilitated by the contraction across Japanese PMI data, while currency jawboning by officials was largely ignored. Furthermore, BoJ Governor Ueda remarked that the Bank cannot sell long-term JGB holdings immediately and have been gradually tapering long-term JGB holdings. Ueda reiterated that the BoJ will adjust the degree of monetary easing if the 2% inflation target is likely to be achieved. If 150 gives way, the 19th March high kicks in @ 150.14.

GBP: GBP/USD +0.3%; 1.2948

• GBP is firmer vs. the USD and one of the better performers across the majors. GBP received some mild additional support following the latest PMI metrics which saw an improvement and beat on expectations for the all-important services metrics and a disappointing outturn for services. Overall, this filtered through into a beat for the composite metric. The accompanying report noted that “The signal from the flash PMI is an economy eking out a modest expansion in March, consistent with quarterly GDP growth of just 0.1%, but with employment continuing to be cut thanks to concern over costs and the uncertain outlook". Elsewhere, attention this week will be on Chancellor Reeve's spring statement and UK CPI, both due to hit on Wednesday. Cable is currently tucked within Friday's 1.2888-1.2970 range.

Antipodeans: AUD/USD +0.4%; 0.6295. NZD/USD U/C; 0.5734

• Antipodeans are mixed amid the indecisive risk tone and with AUD/USD kept afloat following the acceleration in Australia's flash PMI data. AUD/USD is just about back above its 50DMA @ 0.6288 but has stopped shy of the 0.63 mark. If breached, Friday's high sits @ 0.6305. NZD/USD is pretty much flat and off worst levels after slipping to its lowest level since 14th March overnight @ 0.5719.

24 Mar 2025 - 10:05- ForexData- Source: Newsquawk