The dollar and oil continue to show strength. The market has shown a subdued response to President Trump’s announcement late yesterday regarding the extension of its commitment not to target Iran’s energy infrastructure for an additional ten days (April 6). Simultaneously, reports suggest that the US is evaluating the possibility of deploying additional troops to the region. The rationale behind “escalation to de-escalate” remains evident, likely leading to a reduction in risk appetites as the weekend approaches. Meanwhile, Beijing is adopting strategies similar to those of the US by initiating investigations into US trade practices, specifically focusing on supply chains and renewables. This move appears to be a reaction to the recently announced US Section 301 investigations.

This marks the first instance since late last November that the PBOC has increased the dollar’s reference rate on a weekly basis. Nonetheless, the restraint demonstrated by Beijing is significant. Since the onset of the conflict, the yuan has positioned itself as one of the most robust currencies globally. The approximate 0.7% decline represents only half of the losses observed in the leading G10 currencies and the majority of emerging market currencies. Meanwhile, a significant sell-off of Japanese government bonds continues to exert pressure on the yen, and the greenback may rise above JPY160 today for the first time since mid-2024. The euro continued its decline from yesterday, slipping slightly to approximately $1.1515 today in Europe. In the fourth session, it continues to operate within the range established on Monday, having touched a low of approximately $1.1485. Given the potential for certain “escalate to de-escalate tactics over the weekend, there appears to be minimal justification for opposing the continuation of the euro’s decline for the fourth straight session and the third consecutive week. Today marks the expiration of options totaling 1.16 billion euros at a price of $1.1525.

The yen is approaching its recent lows while the dollar remains just under JPY160, accompanied by a three-day decline. However, its performance since the onset of the conflict aligns closely with the average of the G10 currencies. Despite Finance Minister Katayama’s warning regarding speculative actions, and his indication that intervention in the oil futures market could be a possibility, the prevailing circumstances suggest that intervention appears to be a minimal risk at this time. The dollar may very well exceed the widely discussed level today as we approach the weekend. Options totaling nearly $640 million are set at JPY160 and are expiring today. Sterling has experienced a decline over the last three sessions. Options valued at approximately GBP925 million at a rate of $1.33 are set to expire today. Yesterday’s low was approximately $1.3310, and in Europe today, following the weak retail sales report, sterling is testing the $1.33 level ahead of the North American market opening. Sterling remains within the trading range established on Monday, where it encountered buying interest slightly below $1.3260.

The Canadian dollar has experienced an increase in one of the previous eight sessions leading up to today. It remains the second-best performer in the G10 since the onset of the conflict, although it is currently down by just over 1.5%. The greenback achieved a value of CAD1.3865 yesterday, marking its strongest position in two months. It is experiencing a subtle consolidation today within the higher bounds of yesterday’s range. The price has remained above CAD1.3845. The upcoming technical target could potentially be within the CAD1.3900-CAD1.3930 range. The five-session decline pushed the Australian dollar below the support level of $0.6900 yesterday, reaching approximately $0.6875. Chart support remains minimal until approaching the $0.6800 level. A note of caution is that the Aussie closed beneath the lower Bollinger Band yesterday (located around $0.6900 today), which serves as a metric to assess recent declines. The current trading range is approximately $0.6870 to $0.6910 for today.