If this is indeed World War 3, the global demand is for dollars. The greenback is broadly higher, yet there is little movement elsewhere. Other safe havens, such as gold, the Swiss franc, and US Treasuries, are experiencing declines. Equity markets have experienced a sell-off, while the rally in oil is exerting pressure on bond markets. The conflict in the Middle East stands as the sole fundamental issue of significance at this moment. The current situation is obscured by the fog of war, complicating efforts to attain a meaningful perspective. The implementation of a decapitation strike complicates the prospects for an off ramp or any immediate de-escalation. Uncertainty remains elevated. High-frequency economic data holds limited significance. Adhering to a disciplined approach to risk management may represent the most prudent counsel in the current environment.

The euro traded at nearly $1.1670 in North America yesterday. It approximately aligns with the low observed on January 22 and the 200-day moving average, a threshold that the euro has maintained above for the past year. It remained beneath $1.1710 in early Asia today before declining further to nearly $1.1580. Options for 1.8 billion euros at $1.1575 reach their expiration today. The dollar appreciated to JPY157.75 yesterday in North America, likely supported by the nearly 12 basis point increase in US 10-year Treasury yields. The greenback has approached the peak established in the previous month. It has increased to nearly JPY158 today. A congestion zone exists between approximately JPY158 and the January peak near JPY159.45. The apprehension surrounding intervention has diminished.

Last Thursday, sterling exhibited a bearish outside down day. The asset oscillated around the prior day’s range and ultimately closed beneath its lowest point. Sterling strengthened in consolidation ahead of the weekend and faced aggressive selling yesterday. It reached approximately 1.3315 during late activity in the Asia Pacific region. The recovery encountered resistance around $1.3425 in Europe and was subsequently re-evaluated during the North American morning session. It has experienced a further decline to nearly $1.3265 today. The 1.3200 area corresponds to approximately a 38.2% retracement of the rally from the January 2025 low of around 1.21. The lower Bollinger Band is positioned around $1.3345. The three standard deviation threshold from the 20-day moving average is approximately $1.3250. The US dollar declined to a two-week low against the Canadian dollar as the weekend approached, hovering around CAD1.3625. It rebounded to nearly CAD1.3720 yesterday, falling just short of last week’s peak (~CAD1.3725). It once more failed to establish a position above CD1.3700, notwithstanding the multiple intraday breaches observed over the last few weeks. It approaches the peak observed yesterday during the late European morning trading session. Surpassing CAD1.3725, the subsequent objective is approximately CAD1.3760.

The Australian dollar fluctuated within a range of approximately $0.7035 to $0.7115 yesterday. It established a solid position, close to its opening level, and marginally above the pre-weekend low (~$0.7085). It also settled above the 20-day moving average, a trend it has maintained since mid-January. In light of the hawkish remarks made by central bank governor Bullock, the Australian dollar is experiencing an outside down day. It has fluctuated across both extremes of yesterday’s range and currently resides beneath yesterday’s low. Options for A$585 million at $0.7020 reach their expiration today. A breach of the 0.6990 threshold may trigger declines towards 0.6955 and subsequently 0.6900.