The US Dollar’s rally is extending today; however, the market exhibits caution regarding potential intervention by Japanese officials. The Dollar Index has remained stable since last Tuesday. It has increased by slightly over 2% following the Federal Reserve’s hawkish stance announced last week. For the second consecutive session, the dollar is appreciating, despite the absence of support from elevated two-year rates. The greenback is reaching new highs for the year against various G10 currencies today, including the euro, sterling, Swedish krona, and the New Zealand and Canadian dollars. More vessels are navigating the Strait of Hormuz, with reports suggesting that these ships are maintaining their satellite signals, indicative of an increasing confidence among ship owners.
August WTI declined to approximately $71.55 today, marking its lowest point since March 10. Equities have largely found stability following the decline led by the technology sector observed yesterday. The attention turns to the earnings report of Micron Technology later today. The euro traded predominantly below $1.14 during the North American session yesterday, experiencing a decline to nearly $1.1375. It has struggled to maintain trading levels above that point today, while the euro has experienced another decline. It has frayed $1.1340, the (38.2%) retracement of the euro’s rise since February 2025. A convincing break could target the $1.11-$1.12 area. The market is acutely aware of the potential for Bank of Japan intervention should the yen continue to weaken.
The pricing of the risk reversals in the options market appears to align with dollar bulls acquiring puts as a protective measure. The yen engaged in a consolidation phase yesterday, remaining within the range established on Monday. In North America yesterday, the market exhibited a hesitance to elevate the dollar significantly beyond JPY161.60. It is currently situated within a range of JPY161.50 to JPY161.80 today. Options valued at just over $1 billion at JPY161.50 are set to expire today. Sterling reversed Monday’s gain yesterday and continued to decline today, reaching a new low for the year near $1.3155. A convincing break could target $1.3040 next and then the low from last November (~$1.2985).
The Canadian dollar has declined for the tenth consecutive session today, matching its slide observed in April-May 2017. The greenback reached nearly CAD1.4240 today, marking the highest level in 14 months. Despite the momentum indicators being stretched, the price action continues to exhibit a constructive trend. The subsequent chart point is approaching CAD1.44. The Australian dollar is experiencing a continued decline. It was sold slightly below $0.6910 yesterday and $0.6885 today, marking its lowest level since early April. The next technical target is in the 0.6835-55 area, which encompasses the March low and the 200-day moving average.