President Trump’s remarks caused a significant decline in the value of the dollar yesterday. The administration’s apparent indifference towards the recent sharp decline of the dollar has heightened market anxieties regarding a potential preference for a weaker currency. It comes after what seems to have been a form of verbal intervention aimed at bolstering the yen, facilitated by Fed price checks that reportedly bear the Treasury’s influence. The pronounced sell-off in the North American afternoon appears to have reached its limit following the initial movement that commenced early last week. A significant number of dollar shorts appeared satisfied to relinquish their positions to the incoming sellers. Japan’s Finance Minister Katayama emphasized the importance of maintaining the possibility of joint intervention, stating that Tokyo will work in tandem with the US on “currency responses when necessary.” Focus today shifts to the FOMC and Bank of Canada meetings. It is anticipated that neither central bank will take any action. There are instances when the statements made by officials could hold greater significance than their actions. Brazil’s central bank convenes today, with expectations to maintain the Selic rate at 15.0%. Sweden’s Riksbank is scheduled to convene tomorrow, and it is anticipated that the policy rate will hold steady at 1.75%.

The euro experienced an increase for the fourth consecutive session yesterday. Following a pause near $1.20, it surged past that level late in the North American session after President Trump expressed that he was unconcerned about the dollar’s depreciation. and apparently with the assistance of stops, surged to $1.2080, marking its highest level since June 2023. Some euro purchasing activity may be linked to a few significant options. On Friday, options totaling nearly 4.3 billion euros at $1.19 will expire, and on Monday (February 2), options amounting to 2.0 billion euros at $1.20 will also expire. It has closed above its upper Bollinger Band (currently around $1.1965) for the third straight session. Indeed, it concluded more than three standard deviations above the 20-day moving average. The absence of follow-through buying today has resulted in the euro consolidating within a range of $1.1960 to $1.2045.

Following a significant outside down day against the yen prior to the weekend, bolstered by reports of the Fed monitoring prices seemingly for the US Treasury, the dollar opened lower on Monday. The gap exists between the low observed on Friday, approximately JPY155.65, and the high recorded on Monday, around JPY155.35. The dollar declined to approximately JPY152.10 in North America yesterday. The JPY152.50 area represents a (50%) retracement of the greenback’s rally from the September 17 low (~JPY145.50), which occurred when the Fed cut rates for the first time last year. The dollar has closed beneath its lower Bollinger Band for the second straight session. The current level is approximately JPY153.10. The dollar is currently stabilizing within a range of approximately JPY152.20 to JPY153.05 today. The widespread decline of the dollar enabled sterling to continue its recent upward trend, surpassing last year’s peak, which was just under $1.3790. It surged to almost $1.3870 following President Trump’s remarks. Sterling achieved its highest point since October 2021. Sterling’s seven-day run commenced with an outside up day on January 19. For the third consecutive session, sterling has closed above its upper Bollinger Band, currently located around $1.3765. It concluded more than three standard deviations above the 20-day moving average. It established a support level around $1.3770 today and has remained below $1.3850.

The Canadian dollar achieved its highest position since last July as the greenback faced significant pressure. The US dollar experienced a bearish outside down day, resulting in a decline to CAD1.3560. It has been observed trading beneath the 200-week moving average (~CAD1.3615) for the first instance since September 2022. The US dollar has positioned itself beneath its lower Bollinger Band (~CAD1.3595 today) for the first time in more than a month. The Canadian dollar slightly increased its gains from yesterday as the U.S. dollar faced downward pressure during the European morning session. It remains essentially the same. The Australian dollar surpassed $0.7000 yesterday, marking its first occurrence above this threshold since February 2023. It increased marginally past $0.7015 and approached nearly $0.7025 today. The charts reveal minimal activity prior to the 2023 peak, which stands at approximately $0.7160. On January 19, it recorded an outside up day after establishing support just beneath $0.6670. It has closed above the upper Bollinger Band (~$0.6975 today) for the fifth consecutive session. The Australian dollar has consistently surpassed the previous session’s high since January 16. Today’s low is approximately $0.6980.