Equities and bonds have experienced a significant decline. The US dollar has experienced a significant increase. The Trump administration may find the market’s response unsatisfactory, and efforts for damage control could be initiated today. However, with the long weekend approaching, starting tomorrow for several financial hubs—some of which will also be closed on Monday—it may prove challenging to rekindle investor enthusiasm. Fear has now eclipsed the hope that previously dominated the narrative over the last few sessions.
The euro experienced a pause yesterday, approaching the previous week’s peaks in the $1.1630-40 range. Short-term participants might have liquidated their long positions following a 1.5-cent increase over two sessions, in anticipation of President Trump’s address. The retreat extended approximately $1.1515 today, aligning with a retracement target from this week’s recovery starting around $1.1445. Proximity to support is observed in the $1.1485-$1.1500 range. It is important to highlight that options for 720 million euros at $1.1513 and 2 billion at $1.1500 are set to expire today. The dollar experienced a decline of approximately 1.35% against the Japanese yen, moving from Monday’s peak to yesterday’s trough. This disrupts the one-way market that Japanese officials noted, as the dollar rose for four consecutive days last week.
The recent risk-off sentiment and the rise in US yields have propelled the dollar to nearly JPY159.75 today, bringing JPY160 back into focus. Options totaling approximately $1.5 billion that were established in that area are set to expire today. Initial support is identified in the JPY159.35 region. Sterling reached a peak just 1/100 of a cent below last Friday’s high yesterday, as reported. Following a slight rise past $1.3345, the pound retreated below the $1.3300 mark. It has been traded just below $1.3200 today. On Tuesday, a four-month low was observed, approaching $1.3160. The intraday momentum indicator is currently in an oversold position. Resistance is observed in the $1.3240-50 range.
The US dollar reached its highest point against the Canadian dollar on Tuesday, slightly exceeding CAD1.3965, before being traded down to nearly CAD1.3870 yesterday. Today, it reached a slight new low before being driven above yesterday’s high, just below CAD1.3920. The peak for the week was noted on Tuesday at approximately CAD1.3965. Resistance is observed in the CAD1.4000-20 range above. The Australian dollar continued its upward movement from approximately $0.6835 on Monday and Tuesday, reaching just above $0.6960 yesterday. The upward trend lost steam, and the Australian dollar fell beneath $0.6915 during the late trading hours in North America. It was sold at $0.6865 today. A break could lead to a re-test of the week’s low. Robust support is observed near $0.6800, coinciding with the expiration of options totaling nearly A$1.2 billion today.