Psychology for major markets February 13th

EUR/USD – EUR/USD broke above 1.04 on hopes of an end to the Ukraine war which also boosted European equities and yields. But upside progress still seems likely to be difficult with any peace dividend likely to be some time away.

USD/JPY – JPY moved lower in the more risk friendly environment helped by the hopes of peace in Ukraine, while higher US CPI boosted USD/JPY via higher US yields. But risks from 154 look to be on the downside.

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 unless risk sentiment turns sour.

Equities – Sold off sharply on tariff announcements and vulnerable if tariff concerns re-emerge, despite bouncing back to close to the highs. US market remains extremely expensive as yields rise and hoped of Fed easing fade.