EUROPEAN FX UPDATE: Greenback runs into tech resistance after reaching new highs

Analysis details (09:55)

DXY/JPY

The Dollar and index notched fresh peaks in wake of last Friday’s strong US PCE data, as the former probed some key chart levels against its major and EM counterparts or got very close before losing a bit of upward momentum. Indeed, the DXY ran out of puff ahead of 105.500 and a Fib just a fraction above (105.520), at 105.360, while the Yen managed to contain losses through 136.50 and keep afloat of a retracement level at 136.66 in the process, irrespective of more consistency from BoJ Governor candidate Ueda at this upper house hearing. To recap, he resolved to keep ultra-loose policy and repeated that the BoJ expects core consumer inflation to slow beyond 2% in both fiscal years 2023 and 2024. However, the index found support and underlying bids in to 105.000, at 105.070, as another month end bank model flagged moderate Buck buying for rebalancing to offset a recovery in risk appetite ahead of durable goods, pending home sales and another speech by Fed’s Jefferson.

GBP/CAD/EUR   

All a tad firmer against the Greenback, as the Pound recovered from a decline below its 200 DMA within a 1.1984-23 range amidst heightened prospects of a deal on NI trade in advance of a meeting between UK PM Sunak and EU President von der Leyen due to kick off at noon, the Loonie clawed back from sub-1.3600 with some traction from firmer crude prices pre-Canadian Q4 current account data and the Euro straddled 1.0550 against the backdrop of a marked retreat in EGBs. 

AUD/CHF/NZD

The Aussie could not take advantage of the aforementioned improvement in risk sentiment as it suffered further contagion with the Yuan to test 0.6700, the Franc continued to suffer as a funding currency on the 0.9400 handle following a hefty drop in Swiss sight deposits at domestic banks and the Kiwi pivoted 0.6150 after a sharp downturn in NZ Q4 retail sales.

SCANDI/EM

No pick-up in Swedish consumption and slower household lending growth hardly helped the Sek, but the Nok drew some encouragement from a partial rebound in Norwegian retail sales and the Czk from hawkish comments by CNB’s Holub (will probably back a tightening move at the next policy meeting). Elsewhere, the Inr was reliant on RBI intervention to stem depreciation and the Cny/Cnh got some reprieve via the PBoC setting a slightly firmer than expected midpoint fix for the onshore Yuan, while the offshore unit held a few pips above 6.9900, and the Zar pared some losses after its FATF grey listing. Conversely, the Try was hit by another quake and a wider Turkish trade deficit.

27 Feb 2023 - 09:55- Fixed IncomeData- Source: Newsquawk