Brandt's Biggest FX Bet Is Short EUR/JPY as Yen Strengthens
Peter Brandt's firm holds its largest futures and FX position in a short EUR/JPY trade as the yen gains on intervention and rate expectations.
EUR/USD pulled back as hawkish Fed bets steadied and profit-taking emerged; traders eye US CPI for rate hike clues.
Fundamental Overview
US Dollar:
The greenback has declined broadly, likely on profit-taking after the hawkish repricing steadied. The US CPI data due next Friday represents the key risk event that could shift market expectations. Currently, traders see a 58% probability of a rate hike in September.
Only a soft CPI reading would likely bring that probability below 50% and dissuade the Fed from raising rates at its next meeting. If the odds remain at 50% or higher, the central bank may be compelled to hike, as failing to do so would send a dovish signal.
Euro:
The European Central Bank is widely expected to raise interest rates by 25 basis points at its upcoming meeting, taking the policy rate to 2.50%. "ECB sources" have confirmed that the bank is ready to raise rates in September but indicated little appetite to signal further tightening beyond that.
This implies that the market's current pricing of 46 basis points of tightening by year-end may be overestimated, and the euro could weaken if economic data begins to deteriorate. However, EUR/USD will be driven primarily by the US dollar side for now, as that is where expectations are most volatile.
EUR/USD Technical Analysis β Daily Timeframe
EUR/USD has bounced from the support zone near 1.1560. Buyers are likely to continue stepping in there with a defined risk below support, targeting the 1.18 level. Sellers, on the other hand, want to see a break lower to add to bearish positions aiming for the key 1.14 support.
EUR/USD Technical Analysis β 4-Hour Timeframe
A downward trendline defines the recent pullback into support. Sellers will likely lean on that trendline with a risk above it, pushing for new lows. Buyers will look for a break higher to add to bullish bets targeting 1.18.
EUR/USD Technical Analysis β 1-Hour Timeframe
A minor upward trendline is shaping the pullback toward the 4-hour trendline. Buyers are expected to use it with risk below, aiming for fresh highs. Sellers will look for a break to enter shorts for a drop to the 1.1560 support and potentially a breakdown.
Upcoming Catalysts
Today, Fed Governor Waller speaks, along with US jobless claims and the ISM Services PMI. Tomorrow, the week concludes with the US nonfarm payrolls report.
Share to
Disclaimer: this article comes from third-party media and is provided for reference only. It does not constitute investment advice. Crypto and other financial products carry significant price volatility risk, so please make your own decisions carefully.
Peter Brandt's firm holds its largest futures and FX position in a short EUR/JPY trade as the yen gains on intervention and rate expectations.
The PBOC is expected to announce its daily USD/CNY midpoint around 0115 GMT, with Reuters estimating it at 6.6758.
MUFG expects the ECB to hold next week and deliver two more hikes through Q1 2027. It sees EUR/USD at 1.12 by year-end.
Stock futures point to sharp losses, oil nears $100, and Treasury yields fall amid renewed Iran strike fears. Earnings beats fail to lift some shares.