Amid ongoing tensions, there are reports of increased oil movement through the Strait of Hormuz, as well as through alternative pipelines that circumvent this critical chokepoint. President Trump is once more suggesting that the conflict may conclude soon. Second, Japanese Prime Minister Takaichi is in Washington today. It would be fascinating to observe as she articulates how the US-imposed constitution limits its capacity to deploy escort ships, even as she and her predecessor have aimed to broaden the interpretation of the constraints on the use of force. The third point of focus is the meetings of the Bank of Canada and the Federal Reserve. Both central banks are expected to maintain their current policies. The Federal Reserve is set to revise its economic forecasts. In the context of varying perspectives, the central tendency indicated a singular rate reduction anticipated within this year. Amidst the uncertainties of the current situation, confidence in economic forecasts remains limited; however, it is plausible that the median dot extends the anticipated cut into the following year. Weak economic data prior to the war could influence the Bank of Canada’s acknowledgment of a possible inflation shock.

The US dollar is generally showing slight strength against the G10 currencies. Turnover remains subdued. Equities and fixed-income securities are experiencing an upward trend. May WTI is rebounding from a three-day low around $91.50 today and has risen above $94 as the North American session approaches. The euro exhibited strong trading performance yesterday. The three-day high was observed in North America around $1.1550. This enabled it to recover approximately 50% of the losses incurred since the peak reached last week (~$1.1665). The euro is exhibiting a stable yet resilient performance today. The price is primarily fluctuating within the range of $1.1520 to $1.1550. The upcoming retracement is approximately $1.1570. As the FOMC meeting approaches its conclusion today, the short-term market may seek opportunities to sell euro upticks following a two-day bounce of 1.3 cents. The dollar reached a four-day low today against the Japanese yen, hovering around JPY158.55, dipping below yesterday’s low, which was just above JPY158.70. The JPY158.50 level represents the midpoint of the dollar’s progression from the low of JPY157.30 observed on March 10. The dollar made a recovery, rising above JPY159.00 during early European trading, only to encounter selling pressure. Options for 1.2 billion at JPY 159 expire today. The upcoming retracement target is approximately JPY158.20. Currently, we are observing the third consecutive session characterized by lower highs and lower lows. Japanese Prime Minister Takaichi is currently in Washington. The upcoming meeting could be fraught with tension, particularly considering Japan’s hesitance to deploy escort ships to the Middle East. She is expected to detail the constitutional constraints established by the US following WWII, which she and her predecessor have contributed to altering.

Sterling exhibited a strong performance yesterday; however, it failed to surpass last Friday’s peak (~$1.3370), unlike the euro which succeeded in doing so. Today, it increased to $1.3375 with limited follow-through and remains relatively stable as the North American session commences. Proximity to support is observed in the $1.3320-40 range. The asset has regained approximately 50% of the declines experienced from the peak observed last week (~$1.3485). The upcoming technical challenge lies within the range of $1.3380 to $1.3415. The US dollar is consolidating its position relative to the Canadian dollar. It traded within the range established on Monday, which itself was contained within the range from last Friday (~CAD1.3655-CAD1.3740). Today, it has remained within the range established yesterday, trading steadily between approximately CAD1.3685 and nearly CAD1.3715. Approximately $615 million in options are set at CAD1.3675, expiring today shortly after the Bank of Canada meeting results are announced. The coiling pattern manifested as a reversal pattern earlier this month; however, it may also serve as a continuation pattern. Honor the movement of the market. The Australian dollar approached $0.7120, marking a three-day high yesterday following the central bank’s second rate hike of the year. Today’s follow-through buying has been restricted to just a few hundredths of a cent. Options totaling approximately A$930 million at a price of $0.7100 are set to expire today. The charts show minimal resistance to the multiyear high achieved earlier this month, just below the significant levels of $0.7190 and $0.7200.

The dollar experienced a decline, reaching a four-day low against the Mexican peso yesterday, hovering around MXN17.6120, and has approached MXN17.60 today. The US dollar has relinquished approximately 50% of its advancements since the onset of the conflict. Support could potentially be found in the MXN17.50-55 range. The dollar exhibited a consolidation trend with a softer bias relative to the Chinese yuan yesterday. It traded predominantly under Monday’s low during the North American session (~CNH6.8860). It has been sold through last Friday’s low (~CNH6.8780) today and reached nearly CNH6.8720. Last week’s low was near CNH6.86. The PBOC established the dollar’s fix at CNY6.8940 today, compared to CNH6.8961 yesterday. The US dollar reached an unprecedented level against the Indian rupee, approximately INR92.6360. Despite India holding approximately $716 billion in reserves, inclusive of gold, there are concerns among some analysts regarding its adequacy, as it covers less than nine months of imports, marking the lowest level in three years. The central bank engages in the forward market with a degree of opacity, and by the conclusion of January, it had approximately $68 billion in dollar sales.