EUROPEAN FX UPDATE: USD broadly firmer vs. peers with macro newsflow on the light side

USD: DXY +0.2%; 104.03

• USD is firmer vs. most peers with DXY building on yesterday's gains. Earlier in the week, DXY hit a fresh YTD trough @ 103.19 but has since made its way back onto a 104 handle with a current session high @ 104.15. On the recent pick-up in the USD, ING writes that there has been "no clear catalyst in data or market events, and the USD rebound seems to be more related to the unwinding of short positions ahead of US tariffs being implemented on 2 April". Today's US data calendar is a light one, however, we will be getting remarks from Fed's Williams, Goolsbee and Waller with the latter having dissented on the FOMC's balance sheet decision earlier in the week.

EUR: EUR/USD -0.2%; 1.0835

• EUR softer vs. the broadly firmer USD with fresh fundamental updates out of the Eurozone on the light side after remarks from ECB President Lagarde yesterday in which she outlined the Bank's assessment of the potential impact of US tariffs and possible EU retaliation. For today, some attention will be on events in the Bundesrat as the German upper house looks to pass the debt reform package. However, a successful vote is widely expected and therefore it should have little sway on EUR. EUR/USD has been as low as 1.0820 but is holding above yesterday's 1.0814 trough.


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  EUR/USD opex: 1.0700 (794M), 1.0720 (254M), 1.0750 (605M), 1.0785 (913M), 1.0800 (1.54BLN), 1.0850 (576M), 1.0825 (440M), 1.0850 (1.1BLN), 1.0860-65 (447M), 1.0870-75 (1.22BLN), 1.0900 (1.8BLN)

JPY: USD/JPY +0.4%; 149.29

• USD/JPY has edged higher and reclaimed the 149.00 handle despite the cautiousness in the region overnight and with the pair also unfazed by the mostly firmer-than-expected Japanese inflation data. Market pricing for the BoJ was little changed with the next 25bps hike from the Bank still not fully priced until October with a total of 33bps of tightening seen by year-end. USD/JPY has ventured as high as 149.66 with attention on a test of 150; WTD high sits @ 150.14.


• 
  USD/JPY opex: 147.00 (1.9BLN), 147.50 (320M), 147.75 (530M), 148.00 (1.1BLN), 148.35 (309M), 148.50 (758M), 149.00 (2.81BLN), 149.50 (319M), 149.60-70 (1.44BLN), 149.85 (881M), 150.00 (1.62BLN), 150.50 (241M)

GBP: GBP/USD -0.2%; 1.2939

• GBP on the backfoot vs. the USD in an extension of yesterday's downside. Despite yesterday's mildly hawkish skew to the BoE announcement in which external member Mann reverted back to the unchanged camp, the pound has fallen victim to the broadly firmer USD. This morning's public sector net borrowing data showed a further deterioration in the nation's finances. Pantheon writes that "Weak public finances mean spending cuts in the Spring Statement, taxes will rise in October". Cable has delved as low as 1.2923 with focus on a potential test of 1.29; not breached since 11th March; 1.2871 was the low that day.

Antipodeans: AUD/USD -0.2%; 0.6291. NZD/USD U/C; 0.5758

• Both struggling for direction after recent losses and with price action contained amid a quiet calendar and the mixed risk sentiment. AUD/USD is fractionally softer vs. the USD and briefly slipped below its 50DMA @ 0.6286. If downside extends, yesterday's low kicks in @ 0.6270. NZD/USD is flat and towards the middle of yesterday's 0.5723-0.5827 range.

21 Mar 2025 - 09:55- ForexEU Research- Source: Newsquawk