Psychology for major markets January 27th

EUR/USD – Edging higher as the USD slips back on tech sector concerns which have undermined US equities and sent US yields lower. Yield spreads and relative cheapness of European equities suggest EUR upside bias.

USD/JPY – JPY rallying strongly as the US equity market falls on tech sector concerns and US yields move lower in concert Yield spreads are consistent with further declines towards 150.

EUR/GBP – Still biased higher as risk weighted towards BoE easing more than expected and market remains concerned at UK fiscal position.

AUD/USD – Made new post-pandemic lows near 0.61 on general USD strength and risk aversion, but has bounced strongly and looks good long term value near current levels, but may be held back by risk aversion near term.

Equities – Dipping on tech sector concerns as AI profitability looks threatened by Chinese competition. High valuations mean there is scope for a large correction