The euro is currently fluctuating within a narrow band, slightly exceeding a quarter-of-a-cent below $1.1720 today. In early North American trading yesterday, the euro encountered support just above the pre-weekend low, which coincided with the 200-day moving average, slightly below $1.1680. It experienced a slight recovery, settling just above $1.1715 as European markets concluded their trading session. A shelf seems to be established in the range of $1.1650 to $1.1670. Options for 1.6 billion euros struck at $1.1650 will expire today, while 1.25 billion euros at $1.1725 are set to expire tomorrow. The inquiry at hand is whether it can be maintained amid what may be characterized as a hawkish hold by the Federal Reserve. The momentum indicators have declined from overbought levels.
The dollar oscillated within Monday’s range against the Japanese yen. It established a solid position yet remained within Monday’s range, thereby neutralizing the technical signal. Nonetheless, the robustness of US interest rates alongside the daily momentum indicators implies that the market could potentially test the JPY160 threshold. Sterling rebounded from a decline beneath $1.3465 during the early North American trading session, ascending to approximately $1.3520, which marked the low observed in the Asia Pacific session. It has remained below 1.3530 today, the lower end of a band of resistance that extends toward 1.3530-40, with 1.36 serving as a more solid cap. Options amounting to GBP525 million at a rate of $1.3525 are set to expire today, alongside an additional set valued at approximately GBP365 million at $1.3490, which also reaches its expiration today. A breach of the 1.3490 level may lead to a retest of the low observed yesterday.
The US dollar experienced a rebound against the Canadian dollar yesterday. It had reached a one-month low on Monday, slightly below CAD1.36. It surpassed CAD1.3690 yesterday and is currently testing that range in Europe. Proximity to resistance is observed in the CAD1.3700-15 range. Overcoming it could spur a movement toward CAD1.3770. Given the current slack in the economy, it is improbable that the Bank of Canada will adopt a similarly hawkish stance as the Federal Reserve has today.
The Australian dollar consolidated yesterday following its ascent to $0.7200 on Monday. The firm CPI data maintains market confidence that the Reserve Bank of Australia will raise interest rates next week for the third time this year, with an approximate 72% probability based on indicative pricing in the futures market. The Australian dollar appreciated by approximately 33% against the yen over the past year, reaching JPY114.70 yesterday, marking its highest level since July 1990. Australia’s trade surplus with Japan reached $30.3 billion last year, a decrease from $35.3 billion in 2024, primarily influenced by the energy and minerals sector.