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G10 Currencies Registering Minimal Adjustments As US PCE Awaited

FOREX
  • Very narrow ranges for major currency pairs on Tuesday, with the likes of EURUSD and GBPUSD continuing to operate in the middle of their 30 pip daily ranges. The early shift lower for US yields moderately weighed on the greenback and saw USDJPY try lower towards session lows of 150.12. However, a 5bp retracement for the US 2-year saw USDJPY rise back above 150.55 as we approach the APAC crossover.
  • No change for the USDJPY trend outlook which remains bullish, and the latest pause appears to be a bull flag formation. A resumption of the trend would pave the way for a climb towards 151.91/95, the Nov 13 ‘23 high and the Oct 1 ‘22 high and major resistance. On the downside, initial firm support lies at 149.41, the 20-day EMA. A break would signal scope for a correction towards 148.01, the 50-day EMA.
  • Plenty of focus on the overnight RBNZ decision and potential impact on NZD. The Bank’s mandate change coupled with NZ domestic data flow has led to some calling for a resumption of the hiking cycle, although this isn’t our Asia-Pac team’s base case.
  • The NZD is marginally less susceptible to a hawkish ‘surprise’ than NZ rates given already long positioning (per CFTC data), although there has seemingly been some reduction in longs ahead of the event.
    • NZD/USD levels to watch: Resistance: 22 Feb high ($0.6218), Support: 15 Feb low ($0.6080).
    • AUD/NZD levels to watch: Support: ’24 low/’23 low (NZD1.0570/60), Resistance: Feb 20 high/20-day EMA (NZD1.0649/1.0655).
  • Wednesday’s APAC session is also highlighted by Australian CPI which precedes the RBNZ decision. In the US, focus turns to the second reading of Q4 GDP on Wednesday before Thursday’s January PCE deflator. European inflation readings will start to cross from Thursday.
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