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Weekly FX Chartbook: Stretched USD strength is raising intervention alert

Forex 5 minutes to read
Charu Chanana 400x400
Charu Chanana

Chief Investment Strategist

Summary:  Stretched momentum and positioning continue to make it hard for the US dollar to extend gains, but there is still a lack of urgency to be short dollars. Key risks stem from intervention from Japan, particularly as Bank of Japan meets on Friday and the usual dovish narrative could prompt USDJPY to test 155+ area. Dovish repricing scope still seen for CAD and GBP, and a correction appears to be looming for Gold.

22_FX_Weekly
Dollar struggled to rally last week despite Fed's pushback to easing expectations and a safety bid coming from escalation in geopolitical tensions. This week's focus will be GDP and PCE, but more importantly any intervention threat from Japan.
22_FX_Momentum
Our FX Scorecard shows momentum in precious metals may be taking a bearish turn in the short-term, while GBP bearish momentum is still getting extended.
22_FX_Positioning
Forex COT to the week of April 19 saw dollar long positioning getting stretched as it jumped by 46% and rose to its highest since Oct 2021. EUR, CAD and GBP led the selling, and only NZD shorts were trimmed marginally.
22_FX_Outlook

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