Psychology for major markets February 12th

EUR/USD – EUR/USD still holding the 1.03-1.04 range having rallied from a test of the bottom end of the range. Some concerns about potential future tariffs on the EU continue to weigh, but news needed to test recent lows after Powell speech failed to change anything. US CPI the next focus.

USD/JPY – JPY correcting lower in a slightly more risk friendly environment following neutral Powell comments, but yield spreads still suggest JPY gains from here.

EUR/GBP – EUR/GBP bounced from 0.83 into and following the BoE MPC meeting, but has fallen back since as markets maintain their view of modest policy easing this year. The 0.83-0.84 range looks hard to break.

AUD/USD – Broke to new post-pandemic lows below 0.61 on general tariff induced USD strength and risk aversion. But has bounced as the tariffs have been suspended, and looks good long term value near current levels, but may be held back by risk aversion near term.

Equities – Sold off sharply on tariff announcements and vulnerable if tariff concerns re-emerge, despite bouncing back to close to the highs. US market will lead the way short term and remains overdue a large correction from extremely expensive levels.