Yesterday, the broad unwinding of USD long positions continued and accelerated due to multiple drivers. The ample provision of USD liquidity by the Fed both in- and outside the US (swaps) continues doing its job. Global tensions eased (cf. stocks), reducing USD safe haven demand. The trend of declining USD interest rate support continued. The exceptional spike in US jobless claims brought hard evidence of the severe impact of the crisis on the US economy. Claims weren't the main driver behind the USD correction, but didn't help either. The trade-weighted USD (DXY) fell below the 100 mark. EUR/USD regained the 1.10 barrier (close 1.1032). USD/JPY closed around 109.30 despite a risk-on context.

This morning, the repositioning out of the dollar continues even as US equity futures suggest that the risk rally might slow. USD/JPY (mid 108 area) declines further. The USD decline is said to be reinforced by yen repatriation flows toward the end of the Japanese fiscal year. Contrary to last week, the Chinese yuan is an ‘underperformer' with USD/CNY stabilizing in the 7.0750 area. Most other regional FX are also rebounding. EUR/USD (1.1040) maintains yesterday's gain.

Today, (consumer) confidence data in France and Italy will probably nosedive in an unprecedented way, but are probably no factor for the euro. Yesterday, EU leaders didn't agree on the (financial) structure of their crisis response. The likes of Germany and The Netherlands still don't agree on financing on an EU level via coronabonds. This a key political topic for the EU, but as mentioned yesterday, we don't think that the ESM/OMT option, if it were to be the outcome, should be that negative for the euro. Yesterday and on Wednesday, there were already technical signs of an EUR/USD bottoming. The swift break above 1.09 improves the technical picture. EUR/USD might have entered a buy-on-dips pattern even as end-of quarter repositioning still might cause some nervous swings. 1.1237/50 is a next topside reference.

Yesterday, EUR/GBP initially hovered in the 0.92 area, but the risk-on sentiment and decline of the dollar also caused an aggressive unwinding of sterling shorts. EUR/GBP is now nearing the 0.90 support, which worked as short-term technical reference/bottom during peak period of financial stress. Sterling trading will continued to be dominated by global trends, but maybe the EUR/GBP decline might slow from here.

Download The Full Sunrise Market Commentary Currencies

This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex Analysis

Editors’ Picks

EUR/USD extends slump after NFP shows massive job loss

EUR/USD is trading below 1.08, down on the day. The Non-Farm Payrolls report has shown a loss of 701,000 jobs, worse than expected. The ISM Non-Manufacturing PMI surprised to the upside with 52.5 points. 

EUR/USD News

GBP/USD drops below 1.23 amid sour mood, after UK data

GBP/USD has dropped below 1.23 as the market mood sours. Final UK Services PMI dropped to 34.5 points, worse than expected.  

GBP/USD News

NFP Quick Analysis: 701K jobs lost only be tip of the iceberg, why King Dollar is ready for coronation

The US lost 701,000 jobs in March, the worst in 11 years. The Non-Farm Payrolls figures are lagging the fast-moving events. Wage growth is also skewed and should be ignored. The safe-haven dollar has room to rise. 

Read more

WTI trades in three-week’s highs near $26.50 a barrel

WTI is jumping from multi-year lows following the US President Trump’s tweet of yesterday (Thursday) suggesting a Saudi-Russian deal was on the pipeline.

Oil News

Gold remains confined in a range, moves little post-NFP

Gold extended its sideways consolidative price action around the $1615 region and had a rather muted reaction to the US monthly employment details

Gold News

Forex Majors

Cryptocurrencies

Signatures