Forex - Psychology/Strategy for major markets today

 19:23 (GMT) 13 May

  [Forex Strategy]

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Psychology/Strategy for major markets today (0101-LCTK-C01)

EUR/USD - Still holding close to 1.12. EUR starting to gain a bid from risk aversion. Positioning suggests scope for unwinding of USD longs to push to 1.13, but concerns about European sensitivity to trade disruption limits EUR upside.

USD/JPY - JPY the main beneficiary of trade concerns on tariff increases. Break below 110 clears the way for further declines in the absence of progress on trade talks. Positioning suggests scope for declines to 108 or below as volatility picks up.

EUR/GBP, GBP/USD - Fading expectations of deal between government and Labour on Brexit weighing on GBP. EUR/GBP above 0.8650 and further EUR/GBP gains towards the top end of the recent range at 0.87 look likely as risk aversion sets in.

DJIA, S&P - Headlines can trigger moves in both directions but bias is negative. A trade deal may eventually be made but neither side is in a hurry at present.

T-Bond - Mild Chinese retaliation still leaving room for negotiations could be seen as reassuring, preventing a near term US reaction and turning the spotlight onto upcoming US data.

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