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FOREX: Waller Remarks Prompt Softer Dollar, USDJPY Prints 4-Week Lows

FOREX
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  • There has been broad dollar weakness in the aftermath of comments from Fed’s Waller, who failed to rule out a rate cut in March, contrasting with current market pricing. While not substantially different to his prior comments, the ICE USD index slid from session gains to losses amid March Fed cut pricing lifting to 8.5bps vs 6bp pre-Waller and 5bp pre-CPI.
  • With Japanese yen volatility in focus overnight, USDJPY (-0.75%) had the most significant adjustment, falling from 156.10 to fresh four-week lows of 155.11. Spot has narrowed the gap to the 50-day EMA, intersecting today at 154.90.
  • Price action so far appears to be technically corrective, however, it is worth noting USDJPY trendline support at 153.83 (drawn from the Sep 16 low), a break of which would be a stronger signal of a directional trend shift.
  • EURJPY (-0.61%) and GBPJPY (-0.71%) are notably pressuring the psychological pivots of 160.00 and 190.00 respectively once again, with bearish threats for both crosses continuing to develop.
  • Barring the 100 pip range in the aftermath of the US inflation data yesterday, EURUSD has spent the majority of the past three sessions trading in close proximity to 1.0300, with a decent amount of option expiries either side of this mark helping to contain momentum in either direction. For reference, there is 5.54bn rolling off between 1.0250/1.0350 today, with a further 3.17bn at 1.0300 on Friday and 2bn at 1.0300/1.0305 on Monday.
  • China activity data will be a focus for Friday’s APAC calendar, before UK retail sales. In the US, building permits and industrial production highlights a lighter docket.
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  • There has been broad dollar weakness in the aftermath of comments from Fed’s Waller, who failed to rule out a rate cut in March, contrasting with current market pricing. While not substantially different to his prior comments, the ICE USD index slid from session gains to losses amid March Fed cut pricing lifting to 8.5bps vs 6bp pre-Waller and 5bp pre-CPI.
  • With Japanese yen volatility in focus overnight, USDJPY (-0.75%) had the most significant adjustment, falling from 156.10 to fresh four-week lows of 155.11. Spot has narrowed the gap to the 50-day EMA, intersecting today at 154.90.
  • Price action so far appears to be technically corrective, however, it is worth noting USDJPY trendline support at 153.83 (drawn from the Sep 16 low), a break of which would be a stronger signal of a directional trend shift.
  • EURJPY (-0.61%) and GBPJPY (-0.71%) are notably pressuring the psychological pivots of 160.00 and 190.00 respectively once again, with bearish threats for both crosses continuing to develop.
  • Barring the 100 pip range in the aftermath of the US inflation data yesterday, EURUSD has spent the majority of the past three sessions trading in close proximity to 1.0300, with a decent amount of option expiries either side of this mark helping to contain momentum in either direction. For reference, there is 5.54bn rolling off between 1.0250/1.0350 today, with a further 3.17bn at 1.0300 on Friday and 2bn at 1.0300/1.0305 on Monday.
  • China activity data will be a focus for Friday’s APAC calendar, before UK retail sales. In the US, building permits and industrial production highlights a lighter docket.