EUROPEAN FX UPDATE: USD lower vs. all peers, EUR benefits from its liquidity premium

USD: DXY -0.4%; 99.42

• DXY has pulled back with the USD lower vs. all peers after gaining yesterday on account of hopes on the trade front and more conciliatory language from President Trump re Fed Chair Powell. In terms of the latest state-of-play, Trump said it depends on China how soon tariffs can come down and they have spoken to 90 countries regarding tariffs already. Trump added that if they don't have a deal, they will set tariffs and could set the tariff for China over the next two or three weeks. Note, China this morning said they are not yet in trade talks with the US. As month-end approaches, Barclays says its passive rebalancing model shows strong dollar buying against all majors. For today's docket, data releases include US durables and weekly claims figures, whilst Kashkari is due to deliver remarks. Session low for DXY sits @ 99.29 but is some way north of yesterday's 98.86 base.

EUR: EUR/USD +0.7%; 1.1385

• EUR firmer vs. the USD and the best performer across the majors with the EUR benefiting from its status as the most liquid alternative to the USD. On the trade front, not a great deal has changed for the EU with the Trump administration focusing more on the likes of India and China. However, yesterday underscored the differences between the two sides with EU's Dombrovskis stating that "Europe will NOT negotiate over value-added taxes, agricultural subsidies in tariff talks". Elsewhere, ECB speak has continued to lean towards suggesting that tariffs will weigh on inflation in the Eurozone, whilst ECB's Rehn has refused to rule out larger rate cuts. German IFO data exceeded expectations but failed to have any material sway on the EUR given the headwinds facing the nation. A June 25bps cut is priced at 73%. EUR/USD is currently stuck on a 1.13 handle and within yesterday's 1.1308-1.1440 range.


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  EUR/USD opex: 1.1250 (1.1bln), 1.1300-05 (843mln), 1.1370 (1bln), 1.1430 (800mln) 1.1450 (1.1bln), 1.1500 (1.3bln), 1.1575 (609mln)

JPY: USD/JPY -0.6%; 142.54

• USD/JPY pulled back from the 143.00 territory after rallying yesterday, owing to the positive risk appetite and stronger buck, while recent data showed firmer Services PPI from Japan. On the trade front, Japanese Economic Minister Akazawa plans to visit the US for tariff talks from April 30th, while it was also reported that the US told Japan it cannot give special treatment regarding tariffs during talks held earlier this month. USD/JPY has delved as low as 142.51 but is still some way clear of yesterday's trough @ 141.49.

GBP: GBP/USD +0.4%; 1.3306

• GBP firmer vs. the USD but to a lesser extent than most peers. Newsflow out of the UK remains on the light side. However, on the trade front, UK Chancellor Reeves said the UK will not rush trade talks with the US and will not relax food standards to secure a deal. Note, expectations of an imminent UK trade deal are relatively low given the complexities of such a deal and the Trump administration's apparent preference for striking a deal with India or Japan first. Today's speaker docket sees BoE's Lombardelli due to give remarks. Her comments will follow those of Greene earlier in the week who suggested that tariffs are expected to be net disinflationary for the UK. Cable has just popped above the 1.33 mark and sits within yesterday's 1.3234-1.3339 range.

Antipodeans: AUD/USD +0.3%; 0.6377. NZD/USD +0.5%; 0.5976

• Both a touch firmer vs. the broadly weaker USD with little in the way of newsflow from Australia or New Zealand. As such, direction for both will likely be dictated by trade developments and the broader risk tone. AUD/USD hit a fresh low for the week overnight @ 0.6344 before moving back into positive territory. Current session peak is @ 0.6388 vs. yesterday's best @ 0.6436. NZD/USD is currently holding with yesterday's 0.5936-0.6013 range.

24 Apr 2025 - 10:20- ForexEU Research- Source: Newsquawk