Psychology for major markets February 18th

EUR/USD – EUR/USD broke above 1.04 on hopes of an end to the Ukraine war which has also boosted European equities and yields, and has extended gains as the market has taken a positive view of the US reciprocal tariff announcement. But a lot of optimism is getting priced in so upside progress through 1.05 is likely to be a struggle.

USD/JPY – USD/JPY pushing lower as US yields drop back and JGB yields hit 15 year highs on stronger than expected Japanese GDP.

EUR/GBP – EUR/GBP testing 0.83 after better than expected employment data, but failing to hold the initial break lower and GBP still looks a little expensive here without some more positive news to justify gains.

AUD/USD – Broke higher as optimism that tariffs won’t be too negative for global growth boosted Asian equities. Still looking attractive on a yield spread basis as long as risk sentiment is positive, but resistance likely at 0.64.

Equities – Proving very resilient as both higher yields and tariff concerns have been shaken off, with hopes of Ukraine peace deal seen as positive. But high US valuations continue to be a barrier to further gains