EUR

The market has been relatively quiet, even with the December FOMC repricing causing a noticeable shift. The dollar, however, has shown little movement, which doesn’t inspire much confidence as we approach the holiday season. It seems market participants are focusing more on next year’s developments—beyond the timing of potential insurance cuts—and on broader policy directions, including the composition of the Fed Board. Key considerations include the trajectory of the U.S. and global economies, as well as whether carry trades and emerging market (EM) risks can remain stable amid potential equity market volatility driven by AI-related jitters.

Given this uncertainty, it’s challenging to take a strong stance on the dollar. Last week, I closed out my remaining sterling shorts ahead of the Autumn Statement. Overall, global data appears stable, and whether the Fed cuts rates next month or not shouldn’t significantly disrupt markets. I maintain exposure to SEK in G10 currencies, along with some positions in ZAR and PLN in EM, though these aren’t exactly high-conviction trades.

In my absence, the euro has remained range-bound, with daily fluctuations but no significant trend. It’s stuck near the 1.15 level, with PMIs showing a slight decline from the previous month’s gains. Mixed U.S. payroll data and dovish commentary from Fed Governors have also kept the dollar from rallying. For now, I see little urgency to act on the euro. Key technical levels include resistance in the 1.1630/60 zone and the 200-day moving average, which is steadily rising toward 1.1430.

GBP

The pound has been relatively stable in the FX space, even amidst the December Fed repricing. While we’ll see more U.S. data today, including Retail Sales and PPI, the main focus is tomorrow’s UK Budget. Our outlook remains unchanged—there’s potential for some relief in GBP as budget details emerge. While the OBR’s assumptions may not be overly optimistic, given current positioning and reduced risk appetite near year-end, a short squeeze in GBP seems likely. The pound has traded slightly stronger, with the GBP/EUR cross testing the 0.8750/65 support zone. Notably, there was solid GBP buying yesterday (~1.75z), although RM sector selling over the past four sessions (~1z average) is worth monitoring. While I’m currently flat on GBP, I feel inclined to go long tactically for the rest of the week. Ideally, I’d aim to rebuild GBP shorts ahead of the BoE meeting. In GBP/USD, resistance lies at 1.3220, with the 200-day moving average at 1.3290, while firm support is at 1.3000/20.

JPY

The yen’s downside momentum has stalled, which isn’t surprising given the recent repricing for a December Fed cut (12bp to 19bp) and a December BoJ hike (6bp to 13bp). USD/JPY has held up relatively well despite these shifts. More U.S. September data is due today, alongside USD month-end flows as we approach Thanksgiving. My bearish bias on JPY remains, but conviction is low. There was notable JPY buying from the DHF community yesterday (~1.75z), and SHF has been net buyers for three consecutive sessions, though overall volumes remain modest. Key support for USD/JPY is at 155.80/00.