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FX analysis – USD bounces back, JPY, GBP and AUD all under pressure as risk sentiment sours.

12 September 2023 By Lachlan Meakin

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Tuesdays FX session is turning out to be a mirror image on Monday’s session Where the USD was battered against its major peers. Today, seeing almost a full retrace of those moves as USD is once again king.

The Dollar Index (DXY) respected the upward trendline support that has led DXY higher since July (with the exception of a brief break in early September). A less aggressive CNH fix by the PBoC and sour risk sentiment also helping the Dollar. DXY rebounding strongly in Tuesday’s session so far, the 105 level will be key. DXY has found increasing resistance above this level for the last 12 months and with an empty news calendar in the US a push higher through the key 105 level in today’s session would be tough going.

GBPUSD had an initial and very brief spike higher on a hot headline UK average earnings figure, but quickly retraced from a high of 1.2530 , losing the psychological 1.2500 as other jobs data painted a grim picture , with the unemployment rate a 200k+ drop in the employment and downward revisions on previous data weighing on Sterling.

USDJPY continued to march higher, looking to fill the gap after the Monday open gap down on Japanese jawboning over the weekend. USDJPY did breach the psychological 147 level earlier in the session but has found some resistance there and at the 23.6 Fibonacci level (147.06) going into the US session.

AUDUSD gave back some of the big gains in Mondays session, but a rebound in the price of iron ore and a relatively firm CNH helped the Aussie stem it’s losses against the USD and certainly out performed its Antipodean rival the NZD. AUDUSD holding the key 0.6400 level trading within 0.6417-40 , AUDNZD trading near the top of its recent range, getting to a high of 1.0885 in the Asian session. NZD undermined by downgrades to NZ fiscal projections in a pre-election report.

The US economic calendar is empty of key risk events in Tuesday’s session, all eyes will be on tomorrows pivotal CPI report though.

 

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