The US dollar is predominantly weaker today as North American participants engage in the market. Market activity is subdued, with a prevailing consolidative atmosphere as the flow of news remains relatively calm. Despite the continuation of US and Iranian discussions scheduled for next week, market sentiment remains tense. Three key developments warrant attention. The PBOC has eliminated the reserve requirement on foreign exchange forwards and modified regulations to facilitate Chinese banks in supplying yuan liquidity to offshore markets. This results in a depreciation of the yuan. The Danish Prime Minister has announced a snap election scheduled for next month (March 24) in an effort to obtain a more robust mandate, aiming to bolster its position against US pressure regarding Greenland. The Greens secured victory in the byelection for the Gorton and Denton constituency located in Greater Manchester. This appears to add complexity to the challenges faced by the Labour government, arising from both the right and the left.

The euro fluctuated within a narrow band of just over a quarter-cent, closing around $1.18 yesterday. It continues to be stuck in a volatile range of approximately $1.1740-$1.1860. It is testing the downward trendline established in late January (~$1.18) during this range-bound activity. Options amounting to 1.85 billion euros are set to expire today. A close above the 20-day moving average (~$1.1825) would enhance the technical outlook. Short-term participants currently seem to lack strong conviction. The dollar exhibited an inside day against the yen, maintaining its position within the ~JPY155.35-JPY156.80 range established on Wednesday. This trend has persisted into today. The price has fluctuated within the range of approximately JPY155.55 to JPY156.25 today. The recent nominees to the BOJ appear to diminish any potential for intervention, suggesting that the market is poised to challenge the official stance. One obstacle is that the US 10-year yield has declined to four-month lows beneath 4%.

Sterling, conversely, recorded an outside day, fluctuating across both extremes of Wednesday’s range. It concluded just beneath Wednesday’s low. The 200-day moving average was tested at approximately $1.3450. It experienced this movement in the latter part of last week, yet it has not dipped below this level since mid-January, which turned out to be the lowest point rather than indicating a more significant downturn. Options for just over GBP400 million at $1.3500 are set to expire today, a level that has largely remained unbreached, while concurrently, it has maintained a position above $1.3460. The Greens’ victory in the Greater Manchester special election had minimal impact. The US dollar exhibited an outside day in relation to the Canadian dollar; however, the closing price remained within the range, thereby neutralizing the technical signal. It marked the seventh consecutive session where CAD1.37 was tested on an intraday basis, yet the greenback has not managed to close above it at any point. Nevertheless, the market seems to maintain its resilience. A convincing break of CAD1.3640, however, would indicate that it has. Currently, it is fluctuating within a tight range of approximately CAD1.3660 to CAD1.3685.

The Australian dollar experienced a decline to session lows yesterday, approaching $0.7065 during the North American morning. However, it rebounded to slightly above $0.7110 in the afternoon before entering a phase of consolidation. The asset is exhibiting stable trading activity today, oscillating between approximately $0.7095 and slightly above $0.7130. Resistance is observed in the $0.7140-50 range. Options for approximately A$925 at a price of $0.7080 are set to expire today. The probabilities for a May hike in the futures market remain relatively stable this week, sitting at approximately 85%.