• AUD/USD hit 0.6966 overnight, buyers emerged and the pair then turn positive

• Broad USD selling, soft US yields , USD/CNH drop buoyed the pair

• Rallies for gold, silver, copper and equities contributed to aiding the pair's lift

• 0.6995 traded in Europe's morning, the pair was up +0.36% in early NY action

• AUD/USD remains above the 10-, 21- & 200-DMAs which gives bulls comfort

• Ongoing consolidation & rising RSIs also comfort AUD/USD bulls

• US July S&P Global PMIs, June new home sales are data risks in NY
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• Cable tracking for its worst week in a month, off around 0.9%

• UK PMIs beat expectations, but price action muted with limited follow-through

• BoE survey further leans against need to tighten policy

• Modest support emerging around 1.3300, though rebounds remain shallow and unconvincing

• Elevated oil backdrop continues to weigh on GBP via terms-of-trade channel

• Break below 1.3300 opens a move toward 1.3250 as next downside target

• Resistance remains firm into 1.3390–1.3400 zone, capping topside attempts
GBPUSD daily chart


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

• EUR/USD slipped from the familiar 1.1400s to 1.1364 Thursday, before settling into a 1.1375-1.1400 range Friday

• Post Fed and 1-year low at 1.1325 and 1.1300 option barriers are key to deeper declines toward 1.1100

• 1.1104 is 50% Fibo retrace of 2025-2026 rally from 1.0125-1.2084, 38.2% is 1.1336

• FX options on alert for next week's Fed with USD calls in demand - they would benefit from lower EUR/USD

• Option risk reversals maintain a higher premium for downside over upside strikes, too

• However, option implied volatility retreats from Thursdays highs and remains close to 2026 lows - no panic yet
EUR/USD daily chart (EBS)


EUR/USD 25 delta risk reversals


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• FX option traders said to have taken profits on upside bets, but some are reinvesting for more USD/JPY gains

• If 164.00 barriers are breached - short gamma positioning could fuel a further rise and topside options would benefit

• However, downside strike option demand outweighs that for topside and their premiums are significantly higher, too

• 1-month 25 delta risk reversals are 1.5 vol premium for JPY calls over puts - USD/JPY downside over upside strikes

• JPY calls would benefit from a spot setback and increased volatility - certainly one driven by FX intervention

• Japanese displeasure with USD/JPY gains is no secret, so the higher it goes, the more nervous the market becomes

• Related comment - War risk fuels Fed option bets
USD/JPY 25 delta risk reversals


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• Yen weakness persists despite intervention worries and the narrowing US-Japan rate gap

• USD/JPY rose to a new multi-decade high of 163.99, on Thursday

• Fin Min Katayama: Japan ready to take decisive action on forex

• US warns against excessive yen volatility, calls for BOJ rate hikes

• There are good offers ahead of 164.00, some likely option barrier defence

• Stops above 164.00 are large, however, speculators are eyeing massive barriers at 165.00

• USD/JPY has seen a 163.73-95, on Friday, according to EBS data

Daily Chart


(Martin Miller is a Reuters market analyst. The views expressed are his own)

• Oil has climbed back above $100 a barrel as Mid-East conflict escalation reignites inflation concerns

• Risk aversion lifts the USD and implied volatility, but gains in the latter appear tepid given the risks to FX

• That's because there is still a lack of actual/realised volatility upon which FX options thrive

• Benchmark 1-month EUR/USD implied volatility is 5.25, not much above recent and 2026 lows at 4.9

• However - 1-month daily realised volatility - often used as a fair value measure - is just 3.85

• In short - If EUR/USD spot repeats last month's performance - implied vol holders would lose money

• Related - FX options wrap - Oil, yields and Fed reignite FX volatility risk
EURUSD FX implied vs realised vol


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• USD/JPY continues to hold relatively bid, Asia 163.73-95 EBS

• Holding below 163.99 high yesterday, 164.00

• 164.00 a point of contention, good offers, maybe on option barrier defence

• Stops above large however and specs eyeing more massive barriers at 165.00

• Fresh threats of FX intervention from FinMin Katayama but taken in stride

• That said, govt position on weak yen-inflation shifting?

• US Treasury also spoke out against yen volatility, for BOJ "normalisation"

• Govt coming round to need for FX action, BOJ hike?

• Tokyo still sees BOJ July hold but some say meeting "live"

• Total $2.4 bln in vanilla option expiries between 163.00-75 supportive

• $783 mln up at 164.00 strike too

• EUR/JPY to 186.65 EBS yesterday, best since 187.55 April 30, Asia 186.39-51

• Support from 186.32 hourly Ichi tenkan, kijun 186.26, cloud 185.76-89

• E652 mln in option expiries at 187.00 to help cap cross

• CHF/JPY sideways, Asia 200.33-75, CHF543 mln option expiries at 199 today

• GBP/JPY also sideways, 217.79-218.31, in recent higher range, 219.60 July 15

• AUD/JPY remained buoyant, 114.02-32, eyeing 114.91 high June 2, 115 test?

• Support seen from 114.03-16 hourly Ichimoku cloud, ascending 100-HMA 114.02

• NZD/JPY off 95.42 high Tuesday but holding own, Asia today 94.39-76

• Holding under ascending 200-HMA at 94.72, 94.90-95.06 hourly Ichimoku cloud

• Related comment , also , on MOF-speak

• On flows , Japan data , for more click on [FXBUZ]

USD/JPY hourly:


AUD/JPY hourly:


NZD/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• Shares of AGTech Holdings jump 7.6% to HK$0.71, on track for the biggest one-day pct gain since June 29

• Stock of Alibaba-backed electronic payment services provider snaps five striaght sessions of decline

• AGTech said on Thursday that its unit inked a technical service agreement with Hong Kong Gold Exchange (HKGX) to develop an electronic trading, clearing and settlement platform

• The fintech firm said all existing bullion trading, clearing, settlement and related electronic activities of HKGX are expected to migrate to the new platform after completion

• Hong Kong shares of Alibaba slip 4.2%

• YTD, AGTech stock up 248.3%, while Hang Seng TECH Index

down 15.8%

(Reporting by Donny Kwok)

• USD/CNY subdued, last 6.7742 from Thurs close 6.7777; SSEC -0.7%

• Capped by Ichimoku cloud 6.7785, also 21 and 55 DMA around 6.7830

• PBOC fix rises modestly to 6.7939 from Thursday's 41-mth low of 6.7906

• Damping decreased, as expected, to around +170 pips from +200

• USD/AXJ broadly subsiding as USD/JPY recedes away from 164.00

• Japan FM repeats warning on potential JPY intervention
CNY


(Ewen Chew is a Reuters market analyst. The views expressed are his own.)

• Australian gold stocks fall as much as 3.9%, while the broader benchmark is down 0.5%

• Sub-index logs biggest intraday pct drop since July 17, but on track for a 1.7% rise for the week

• Gold prices dropped 2% overnight as escalating tensions in the Middle East sent oil prices surging and intensified inflation concerns [GOL/]

• Index leaders Northern Star Resources and Evolution Mining fall as much as 3.2% and 2.8%, respectively

• YTD, AXGD down 18.9%, including the day's moves, underperforming a 0.9% rise in the AXJO

(Reporting by Nikita Maria Jino in Bengaluru)

• Yesterday saw USD/JPY leg up to 163.99 EBS, a tick shy of 164.00

• Market off since on inability to break above, offers up top, on options?

• Talk of some option barriers, Japan exporter offers likely in mix too

• USD/JPY 163.81-91 so far in Asia, specs likely looking for break above

• Stops likely on 164.00 break, massive option barriers at 165.00 in view now

• Japan's MOF conspicuous in its absence in ordering FX intervention

• Growing feeling among many in market MOF may not intervene at all

• Difficult to act with USD broadly strong, Middle East among factors

• Recently wider JGB-US Tsy rate differentials too, in 2s @281, 10s @189 bps

• US yields up on growing expectations of a more hawkish Fed

• Technically, support from flat hourly Ichimoku kijun at 163.49

• Seems equilibrium of sorts on 163 for now pending maybe fresh breaks up

• Option expiries today include 163.00-75 total $2.4 bln, 164.00 $783 mln

• Related comments , , ,

• And , also , on US Tsy stance on FX

• US markets , , ,

• On Fed , , US claims
USD/JPY:


USD/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• AUD/USD opens 0.45% lower after trading in a 0.69625-0.7021 range on Thu

• Undermined by risk aversion, U.S.-Iran tensions, surging oil prices

• Wall Street declines on AI spending worries, Brent futures settle over $100

• U.S. 10-yr yield jumps to 18-mth high on inflation concerns, Fed rate bets

• AUD drop limited by jump in AU jobs data Thu as RBA rate hike bets build

• Support at 0.6960-65 under threat, more support at 0.6945-50, 0.6920-25

• Resistance 0.6995-0.7000, stronger at 0.7020-25; Australia Q2 CPI Wed key
AUD:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

Danske Research reviews today's July ECB meeting.

"The ECB kept policy rates unchanged at the July meeting, with the deposit rate at 2.25%, in line with consensus and market pricing. 

Lagarde kept full optionality on the future policy rate path, without precommitting. There was no market reaction to the meeting," Danske notes.

"We expect a final 25bp hike in September, bringing the deposit rate to 2.50%," Danske adds.

The euro slid after the European Central Bank left its policy rate unchanged as soaring oil prices amid escalating Middle East tensions and a selloff in technology shares fueled haven buying of the dollar. First-time U.S. jobless claims unexpectedly fell last week to their lowest level since the 1960s, signaling continued labor market resilience ahead of next week's Fed meeting. U.S. President Donald Trump said he is seriously considering renewed major combat operations against Iran and would hold Tehran responsible for any attacks by Yemen's Houthis. Trump also said a civil nuclear deal between the U.S. and Saudi Arabia is conditional on Riyadh joining the Abraham Accords normalizing relations with Israel. Yemen's Houthis said earlier on Thursday that they had carried out a military operation targeting two Saudi oil tankers. Additionally, Iran's Revolutionary Guards warned that the southern Strait of Hormuz shipping route has been mined. The European Central Bank, after leaving rates unchanged, kept the door open to a September hike as Middle East tensions cloud the energy outlook. ECB President Christine Lagarde said policymakers may discuss raising banks' minimum reserve requirements. Tech shares were pressured after Alphabet's first-ever cash burn and prospect of greater AI scrutiny after OpenAI's rogue incident. DXY surged to a three-week high, reaching its 101.54 upper Bollinger amid model-driven FX and fixed-income buying before trimming gains as tech shares retreated.

Option demand for dollar upside has risen, pushing one-month risk reversals to a 0.28% premium for the greenback, while the one-year tenor is approaching the 0.48% YTD high recorded in late June. EUR/USD remained under pressure below 1.14 as broad USD strength, rising yields, lower gold and a falling RSI suggest further downside toward its 1.1325 year-to-date low.

GBP/USD fell below its 21-day moving average of 1.3359 and remained biased lower amid dollar haven demand and a bearish pattern of lower highs and lower lows. USD/JPY surged above 163.50, with strong dollar demand, higher yields and geopolitical tensions keeping the bias bullish despite near-overbought conditions around the key 164.00 level. AUD/USD remains vulnerable after breaking below its 10-DMA, with broad USD strength and bearish technical signals suggesting downside risks remain.

Treasury yields were up 1 to 6 basis points as the curve flattened, with the ten-year yield reaching a new 18-mo. high of 4.713%. The 2s-10s curve was down about 1 basis point to +33.7bp.

The S&P 500 fell 1.35% on weakness in consumer and tech shares.

WTI oil surged over 6% to its highest level since June 11.

Gold fell about 2% while copper dropped 2.6% as yields and the dollar advanced.

Heading toward the close: EUR/USD -0.32%, USD/JPY +0.41%, GBP/USD -0.46%, AUD/USD +0.41%, DXY +0.33%, EUR/JPY +0.09%, GBP/JPY -0.05%, AUD/JPY -0.04%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)

• NY opened near 0.7000 after 0.7021 traded overnight, the slide then extended

• Overnight USD buying & US yield , rate gains persisted

• Lower than estimated weekly, continuing jobless claims helped boost the USD

• USD/CNH rally to 6.7784 & drops in gold, silver, copper, equities weighed on AUD/USD

• AUD/UDS fell below the 10-DMA, hit a 3-session low of 0.6965 before bouncing

• The pair sat near 0.6975 late in the session, it traded down -0.31% in NY's afternoon

• Falling daily RSI and today's daily inverted hammer candle are concerns for bulls
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

MUFG Research discusses the impact of AI on FX markets

"AI is evolving from a technology-equity theme into a broader macro and FX driver through six key channels: capital investment, trade flows, productivity, central bank policy, capital flows, and terms of trade. The USD has been the main beneficiary so far, supported by the concentration of AI-related investment in the US and strong foreign demand for US AI-linked assets.

Taiwan and South Korea have been among the largest trade beneficiaries of the AI hardware boom, generating exceptionally large trade surpluses that would normally support much stronger currencies. However, heavy overseas investment by residents and foreign selling of domestic equities have recycled much of the export windfall abroad, limiting appreciation of the TWD and KRW despite sharply improved external balances," MUFG notes.

"The AI buildout is also creating potential winners among commodity-exporting currencies by boosting demand for copper, energy and other critical inputs. The strongest beneficiaries are likely to be the CLP and PEN through higher copper prices, while the AUD, CAD and BRL should benefit from the broader positive terms of trade shock associated with AI-driven infrastructure investment," MUFG adds.

EUR/USD's near-term outlook has turned more bearish after the pair failed to sustain a rally above its 10- and 21-day moving averages and the downtrend line from the May 11 high. Instead, it reversed course and fell to a 16-session low, with the probability of a renewed rally diminishing due to a combination of U.S. employment data, rising oil prices, and shifts in the U.S. interest rate environment.

A key driver has been oil's surge, with Brent crude extending its rally off late-June lows to trade above $100 per barrel on Thursday, stoking investor concerns that inflation could reaccelerate. This has fed directly into the U.S. rate complex, as yields rise on fears the Fed may need to adopt a more hawkish posture. The U.S. 2-year Treasury yield reached a fresh 2026 high, invalidating a bearish rising-wedge pattern on daily charts, while March 2027 SOFR futures broke below their 2025 low—a signal that rates could move significantly higher. This dynamic has widened U.S.-German 2-year yield spreads , boosting the dollar's yield advantage over the euro.

Technical indicators reinforce the bearish case: inverted hammer candlesticks have appeared on both daily and monthly charts, RSI readings point to downward momentum, and EUR/USD's inability to hold above its 10- and 21-day moving averages and the prevailing downtrend line all add to the negative picture.

Until these bearish forces ease, downside risks for EUR/USD are likely to remain elevated.
us2yt


srah27


eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Bank of America Global Research notes that historical evidence for a summer carry bias is relatively weak.

"Delivered vol does not exhibit a persistent decline through the summer, while seasonal effects in implied vol are relatively modest and appear to primarily reflect a mild compression in risk premia rather than a systematic decline in realized uncertainty. This suggests that successful carry environments are driven more by macro regimes than by the calendar itself," BofA notes.

"Taken together, the evidence points to a regime characterized by contained uncertainty, where investors continue to view the macro outlook as sufficiently predictable to favor carry-oriented positioning," BofA adds.

Bearish momentum is gaining traction in GBP/USD as the pound slid to a fresh two-week low at 1.3328, in early NorAm, down from early July highs of 1.3556. This decline is largely driven by the widening conflict in the Middle East and the subsequent surge in oil prices, with Brent crude testing $100/bbl today, a sharp increase from its early July, Memorandum of Understaning, lows of $70/bbl.

Traders appear to be concerned that this rise in oil prices could significantly impact both UK and global inflation expectations and thus further delay the Bank of England's efforts to reach its 2% inflation target.

This dynamic is also pushing UK 10-year gilt yields higher, exacerbating fiscal concerns, with sights set on pre-Memorandum of Understanding levels near 5.20%. These fiscal concerns are not helped by uncertainty over how new Prime Minister Andy Burnham will attempt to balance rising inflation, subdued growth, and high financing costs in managing the UK budget, even though he has committed to fiscal responsibility.

Currently, GBP/USD is finding some support at today's North American session low of 1.3328. However, the consistent pattern of lower highs and lower lows suggests a persistent bearish trend, which could bring the July 2 low of 1.3276 into focus. For a reversal of this bearish outlook, bulls would need to achieve a close above the daily cloud top, currently situated at 1.3425.
Sterling Chart:


(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

Morgan Stanley Research adopts a bullish bias on CAD and a bearish bias on GBP in the near-term.

CAD View: Bullish | Skew: Bullish 

We are bullish on CAD as we think USD/CAD has room to decline as exports recover  and the investment cycle gains traction, USD/CAD has room to grind lower from  here.," MS notes.

"GBP View: Bearish | Skew: Bearish 

We are bearish GBP as we think the market has priced in the good news' from the  potential for a more fiscally conservative Chancellor than initial market  expectations, but the bar for upside surprises has risen," MS adds.

• AUD/USD rallied sharply in Asia after Australia's June employment report

• 0.7021 traded before bulls ran out of gas, the pair then fell in Europe

• NY opened just below 0.7000, AUD/USD traded close to flat in early action

• Sharp USD rally, US yield & rate gains weighed on AUD/USD

• Drops in gold, silver, copper and equities contributed to AUD/USD erasing gains

• A daily inverted hammer candle formed which is a concern for AUD/UDS bulls

• Bulls get comfort from rising monthly RSI, pair's hold above 10-, 21- & 200-DMAs

• US weekly and continuing jobless claims are a data risk in NY's morning
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• EUR/USD -0.01%, USD/JPY 0.13%, GBP/USD -0.07%, AUD/USD 0.01%

• S&P E-minis -0.33%, DAX -0.51%, Nikkei 0.46%, FTSE-100 -0.18%

• Weaker euro and higher oil for ECB to consider on Thursday

• USD/JPY grinds higher on oil and rates but intervention risk tames bulls

• AUD/USD: Bullish undertone meets geopolitical fears

• Cable capped by MA resistance, oil drives dollar bid

• USD/JPY: Options alert to FX gains and intervention risk

• Oil surge reignites inflation fears; Fed, ECB in focus

• FX option expiries U.S. Open (Peter Stoneham is a Reuters market analyst. The views expressed are his own)

))

• GBP tone remains soft, firmer oil skews risks to the downside

• Spot capped below 200-day MA resistance at 1.3390–1.3400

• Oil pushing back toward triple digits, raises hawkish Fed risks

• USD to stay supported as a result, maintaining downside pressure on cable

• Cross adds pressure - EUR/GBP rebounding, +1% from July 15 low (0.8455)

• Near-term support seen at 1.3340–45, ahead of 1.3300
GBP/USD daily chart


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

• USD/JPY extends 40 year highs through 163.40 early Thursday as Oil and US yields advance ever higher

• Option markets lift USD/JPY implied volatility, but gains tepid - benchmark 1-month from 4-year low at 5.95 to 6.1

• The lack of FX realised volatility makes holding options expensive without actual intervention, hence low implied levels

• 1-month daily USD/JPY realised volatility is 4.9 - reflects the lack of actual volatility and why long vol positions are struggling

• However, risk reversals maintain a strong JPY call over put premium to reflect the intervention threat haunting USD/JPY

• OTM JPY call/USD put options offer more cost-effective hedge against USD/JPY intervention
USD/JPY implied vs realised vol


USD/JPY 25 delta option risk reversals


(Richard Pace is a Reuters market analyst. The views expressed are his own)