The US dollar is experiencing a decline against all G10 currencies, yet the overall consolidation observed this week persists. Japanese officials have maintained their verbal intervention, and with the US holiday approaching on Monday, the likelihood of significant intervention appears to be increasing, prompting some yen shorts to cover their positions. Reports indicate that Machado’s decision to donate her Nobel Peace Prize to President Trump is facing widespread criticism. In the meantime, the assertive nationalism of the US appeared to motivate the EU earlier this week and Canada yesterday to explore the possibility of repairing certain trade relationships with China. Ford Motor Company appeared to join the initiative as well, reportedly engaging in discussions with China’s BYD to supply batteries for the hybrid vehicles it manufactures outside North America. President Trump expressed to the Detroit Economic Club his openness to Chinese direct investment in the auto sector. December industrial output data for the US is forthcoming, with expectations indicating a decline in manufacturing production. There has been no increase since July. Boston Fed President Collins addresses the audience today, alongside Governor Jefferson. However, the spotlight is on Governor Bowman, who is scheduled to speak at 11:00 ET. She is perceived as one of the more probable dissenters with Miran at the forthcoming FOMC meeting, advocating for a cut.

The euro experienced a slight decline, trading just below $1.1595 yesterday, marking its lowest point since late November. It maintained its position above the 200-day moving average (~$1.1590 today). It has maintained its position above this level since last March. It is maintaining a position above $1.1600 today, yet it has struggled to regain levels above $1.1625. Options for 2.4 billion euros at $1.16 are set to expire today. A weekly close beneath $1.1600 could set the stage for a move towards $1.1550 next. The yen showed signs of stabilization yesterday and has gained further strength today, following the verbal intervention from Japanese officials, who have hinted at potential material action. The dollar weakened against the yen, reaching JPY158 for the first time in three sessions. Options for 2.12 billion at JPY158 expire today. Speculation suggests that intervention may occur on Monday, coinciding with the US holiday. We maintain a cautious stance as the verbal intervention has halted the yen’s decline.

Sterling declined past $1.3365 yesterday, marking a level not observed since December 19. The rally from the November 21 low (~$1.3040) achieved a (38.2%) retracement objective. Today, it has returned with a stronger bid and is attempting to regain a position above $1.3400 during the European morning session. Today marks the expiration of GBP800 million worth of options at a strike price of $1.3425. A breakthrough at $1.3440 would enhance the technical outlook. Otherwise, the subsequent retracement target is approximately $1.33. The US dollar neared last week’s peak against the Canadian dollar yesterday, hitting CAD1.3920. That is just below the (61.8%) retracement of the greenback’s decline since November 21 (~CAD1.4130). The retracement is located around CAD1.3945, positioned just within the upper Bollinger Band. The greenback is currently stabilizing within a 15-tick range, remaining below CAD1.3900 for the day. Yesterday’s low was just under CAD1.3880, and a close beneath this level would indicate the initial sign that the US dollar’s rally from the CAD1.3645 region on Boxing Day might be losing momentum.

The Australian dollar maintained its base around $0.6660 yesterday, with the Aussie rebounding to close near Wednesday’s peak. The outside up day is regarded as a positive technical indicator. The Australian dollar reached a peak today, noted during the European morning, close to $0.6710. The peak settlement this week was noted on Monday, just above today’s high, while the week’s maximum was logged on Tuesday, slightly exceeding $0.6725. The peak reached on January 7 (~$0.6765) marked the highest point since October 2024.