The dollar experienced selling pressure during President Trump’s State of the Union Address. Nevertheless, in relation to the majority of G10 currencies, it continues to operate within established ranges, a situation that could be bolstered by an active option expiration calendar, as we will elaborate on below. Two notable exceptions exist. The Japanese yen has fallen to more than two-week lows, influenced by the announcement of two dovish appointments to the BOJ board, replacing members whose terms are concluding. This underscores the perception of Prime Minister Takaichi’s monetary policy ambitions. Japanese equities experienced an upswing, while Japanese government bonds faced a decline. Second, Australia’s January CPI exceeded expectations, leading to a slight increase in forecasts for another rate hike potentially at the May central bank meeting. Today, the Australian dollar stands out as the strongest among the G10 currencies.

Geopolitical tensions remain elevated. President Trump issued a warning to Iran during his address. Furthermore, China cautioned that fresh inquiries might jeopardize the tariff truce between the United States and China. Gold and oil exhibit strength. The euro experienced a subdued trading range, oscillating between approximately $1.1765 and $1.1795 yesterday. Since the tariff ruling last Friday, the range has been approximately $1.1745 to $1.1835. It continues to reside within that range as of today. It experienced a modest increase, surpassing $1.18 early today during President Trump’s speech, but has since retreated. Options amounting to nearly 3 billion euros have been established there, set to expire today. Following a peak near JPY156.30, marking a two-week high during the local session yesterday, the greenback traded within a limited range throughout the North American session, primarily oscillating between approximately JPY155.60 and JPY156.20, and subsequently maintaining a narrow band of JPY155.60 to JPY155.85 after the European markets closed.

The announcement regarding Prime Minister Takaichi’s nomination of two dovish candidates to the central bank’s board, set to replace outgoing members at the end of March and June, has exerted downward pressure on the yen, which has now declined for five out of the last six sessions. The dollar appreciated to nearly JPY156.80, likely bolstered by demand linked to options, with approximately $2.85 billion in options at JPY156 set to expire today. The forthcoming technical target appears to be in the vicinity of JPY157.55-75. Sterling exhibited slight fluctuations around Monday’s range yesterday, ultimately concluding with minimal variation. The session high, marginally exceeding $1.3535, was noted as the European close approached. It is currently experiencing subdued trading within the range of approximately $1.3490 to $1.3535. Options for GBP450 million at $1.3550 are set to expire today. The US dollar reached the month’s peak against the Canadian dollar yesterday, approaching CAD1.3725. The current trading range is approximately CAD1.3675 to CAD1.3705. Approximately $475 million in options at CAD1.37 are set to expire today. The forthcoming technical target is approximately CAD1.3760.

The Australian dollar has tested the 20-day moving average (~$0.7045 today) for the third time in the past four sessions, yet it has not closed beneath this threshold since mid-January. Over the last week and a half, the asset has oscillated between $0.7000 and $0.7100, maintaining this cent range without any closures outside of it since February 11. The Australian dollar reached a weekly peak, marginally surpassing $0.7115, yet encountered selling pressure that drove it down to just under $0.7080. Options amounting to A$2.5 billion at a price of $0.7100 are set to expire today.