The US dollar has further strengthened against the majority of currencies today. The perception of a successful US-China summit, coupled with a shift in expectations regarding Federal Reserve policy, is bolstering the value of the greenback. The expected year-end effect has seen the Fed funds rate increase by twelve basis points this week, while the two-year Treasury yield has risen by sixteen basis points, marking the fourth consecutive week of increases. Following the conclusion of the Trump-Xi meeting, attention in the US appears to be shifting back to Iran, where a tenuous ceasefire has effectively halted hostilities. Crude oil prices have reached their peak in over a week. Bond yields have experienced a significant increase, while equity markets are trending downward. The political drama in the UK persists unabated. It has exerted additional pressure on UK stocks and bonds, as well as on sterling, which ranks among the poorest performing currencies in the G10 this week.

Meanwhile, the market has driven the yen to its lowest level since the apparent intervention on April 30. Market sentiment has grown more optimistic regarding the likelihood of a rate hike by the BOJ in the upcoming month. The failure to regain levels above $1.1720 yesterday has positioned the euro bears firmly in control. The euro experienced a decline to $1.1665, concluding the North American session beneath the 200-day moving average, approximately $1.1685 today, marking the first occurrence of this in over a month. Follow-through selling drove it down to nearly $1.1615, marking the fifth consecutive session of losses. A support range is identified in the $1.1580-$1.1600 zone, with 2.4 billion euros in options at $1.1600 set to expire on Monday. Initial resistance may be approximately $1.1660. North American participants appeared notably unenthused by the US Treasury’s endorsement of the “anti-volatility” position associated with Tokyo. The yen was sold off aggressively, pushing the dollar to nearly JPY158.40, marking its highest level since what seems to have been intervention on April 30. Following an inexplicable sharp decline, new session lows were reached around 9:30 AM ET yesterday, approximately JPY157.30. The observed price movement appears to indicate a degree of apprehension among those holding short positions in the yen over the short term.

The dollar has appreciated further, now exceeding JPY158.65. Options amounting to $1 billion at JPY158 are set to expire today, while there are options totaling nearly $4.5 billion at JPY159 that will expire on Monday. Sterling experienced a decline for the fourth consecutive session yesterday. It settled last week at $1.3630, marking its highest settlement in nearly three months, while also approaching the upper Bollinger Band. Yesterday, it slipped below 1.3400 in New York afternoon dealings on news that Greater Manchester Mayor Burnham is once again attempting to maneuver to secure a parliament seat to challenge Prime Minister Starmer. A comparable effort earlier this year was dismissed. Sterling has positioned itself beneath its lower Bollinger Band, which is currently around $1.3395, as well as the 200-day moving average, approximately at $1.3425. The five-day moving average has declined beneath the 20-day moving average. Sterling declined to nearly $1.3325 in Europe today. The 1.3400 area presents initial resistance.

The Canadian dollar persists in its downward trajectory. The greenback rally is extending for its eighth consecutive session today, marking its longest advance since October 2024, and reaching its highest level in approximately a month. It is testing resistance at CAD1.3760, and a decisive break could indicate potential movement towards CAD1.3800-20. The Australian dollar has successfully exited the range established on May 6, which was approximately $0.7180 to $0.7280. It has reached 0.7140 and has initially held above this month’s low (approximately 0.7135). While the subsequent technical objective is nearer to $0.7100, a rebound towards approximately $0.7180 is plausible. Approximately A$400 million in options at $0.7150 are set to expire today, while A$625 million at $0.7170 will expire on Monday.