EUROPEAN FX UPDATE: Havens bolstered by the global equity sell-off

USD: DXY -0.2%; 107.47

• DXY lower on the session with the Dollar on the backfoot vs. safe-haven currencies such as JPY and CHF due to the risk-aversion triggered by the sell-off in global equity markets as a result of the concerns for large-cap US tech names due to announcements from China's DeepSeek over the weekend (see equity section for details). In terms of US commentary, Trump's trade agenda remains in focus after his tariffs threats on Colombia over the weekend and reports suggesting that he could slap pre-emptive tariffs on Canada and Mexico as soon as Saturday. The US macro docket this week is set to see the FOMC stand pat on rates, whilst data highlights includes core PCE metrics and Q4 GDP. DXY sits towards the lower-end of Friday's 107.21-108.19 range and below its 50DMA @ 107.59.

EUR: EUR/USD -0.1%; 1.0480

• Marginally softer vs. the USD and showing some resilience in the face of the global risk aversion stemming from losses in global equity markets. That resilience is likely as a by-product of a better outturn for German IFO data which follows hot on the heels of a more encouraging outturn for EZ PMI metrics on Friday. This week is ECB week, however, the event may not provide much in the way of volatility for EUR given that a 25bps cut is so widely expected. EUR/USD is currently tucked within Friday's 1.0411-1.0521 range and holding above its 50DMA @ 1.0436.


• EUR/USD opex: 1.0400 (1.2bln), 1.0425-30 (895mln), 1.0440-45 (1.8bln), 1.0460 (1bln), 1.0500-05 (1.1bln).

JPY: USD/JPY -0.8%; 154.76

• JPY notable benefitting from the aforementioned risk-aversion whilst fresh Japanese-specific drivers remain light in the wake of Friday's 25bps hike from the BoJ. As it stands, only around 23bps of further tightening from the BoJ is currently priced by the market. USD/JPY has hit a fresh low for the year @ 154.47 and is below its 50DMA@ 154.83. As it stands, there isn't much in the way of support levels ahead of the 154 mark.


• USD/JPY opex: 155.00 (1bln), 155.25 (375mln), 155.95-156.00 (2.1bln).

GBP: GBP/USD -0.1%; 1.2464

• Marginally softer vs. the USD. Fresh macro drivers for the UK have been relatively limited asides from reports that UK Chancellor Reeves is to call on Labour MPs to back her plans to boost growth. On the subject of UK growth, Morgan Stanley has lowered its view for 2025 to 0.9% from 1.3%. EUR/GBP is back below its 200DMA @ 0.8422, whilst Cable is holding on to a bulk of Friday's gains (which some attributed to a short squeeze) which saw the pair lift from a 1.2343 low to a 1.2501 peak.

Antipodeans: AUD/USD -0.3%; 0.6289. NZD/USD -0.4%; 0.5688

• Both suffering at the hands of the broad-based risk-aversion triggered by losses in global equity markets. Further pressure has also been placed by the soft outturn for Chinese NBS PMI metrics over the weekend. AUD/USD has pulled back from Friday's YTD peak @ 0.6330 which coincides with the current level of the 50DMA. The pair has subsequently slipped below the 0.63 mark and delved as low as 0.6278 overnight. Similar price action for NZD/USD which printed a high for the year on Friday @ 0.5723 but is now trading at sub 0.57 levels with a session trough @ 0.5677.

27 Jan 2025 - 09:55- ForexEU Research- Source: Newsquawk