FOREX: Cross/JPY Boosted, USDMXN Trades to Four-Month Low Below 20.00

Chicago Fed President Goolsbee (dove, 2025 FOMC voter) tells the NY Times that the January CPI report was "sobering". While he told the NYT that seasonal effects may have been at play as usual in January, and echoed Fed Chair Powell's post-CPI comments by saying that he would not read too much into a single inflation report, he also said “there’s no question, if we got multiple months like this, then the job is clearly not done." 

• Nonetheless, Goolsbee repeated his pre-CPI outlook on Fed rates - that they would end up a "fair bit below where we are today,” though that's conditional on "confidence that we are on path to 2 percent inflation.”
• It would appear that the January inflation data has tested but not completely shaken FOMC doves' confidence in the disinflationary story - Powell didn't express particular concern when asked in Congress earlier (“we’re close, but not there on inflation.”)
• And the only other post-CPI commenter so far - Atlanta's Bostic, more of a hawk than a dove - doesn't seem to have changed his overall rate cut view (in line with the FOMC median, 50bp this year and 50bp next), though he mentioned "uncertainty" as a reason to be less confident, with the latest inflation data suggesting that careful monitoring of conditions is still required.

Outside of Germany in Europe Pi, structural positioning is slightly more mixed:

• OAT: OAT is in  short positioning (was "very short" in our last update). Recent trade suggests long reduction.
• GILT: Gilt structural positioning remains flat. The most recent week saw trade indicative of long reduction.
• BTP: BTP has returned to its usual structural long positioning, after briefly touching flat territory in January. Shorts were set in the most recent week of trade.

• RES 4: 1.2667 High Dec 19
• RES 3: 1.2610 38.2% retracement of the Sep 26 ‘24 - Jan 13 bear leg   
• RES 2: 1.2576 High Jan 7 
• RES 1: 1.2550 High Feb 5
• PRICE: 1.2430 @ 16:04 GMT Feb 12
• SUP 1: 1.2333/2249 Low Feb 11 / 3   
• SUP 2: 1.2161 Low Jan 17 / 20
• SUP 3: 1.2100 Low Jan 10 and the bear trigger 
• SUP 4: 1.2087 0.764 proj of the Sep 26 - Nov 22 - Dec 6 price swing    

GBPUSD found support Tuesday but for now, the pair continues to trade below its Feb 5 high. Price recently traded above the 20- and 50-day EMAs, and pierced 1.2523, the Jan 27 high. A resumption of gains would signal scope for a move towards 1.2610, a Fibonacci retracement. Key short-term support to watch has been defined at 1.2249, the Feb 3 low. Clearance of this level would instead highlight a reversal and strengthen a bearish threat.