The robust appreciation of the dollar observed in recent days is currently undergoing consolidation. The G10 currencies are exhibiting limited fluctuations within narrow ranges. Most of them are approximately 0.1%. The New Zealand dollar and Norwegian krone have experienced a slight decline. The Canadian dollar is poised to potentially prolong its decline for the 11th consecutive session. The greenback inched nearer to JPY162 as Japanese officials maintain a passive stance. Oil prices have persisted in reversing their wartime increases, and reports indicate that Israel is withdrawing from certain areas in southern Lebanon. Micron’s earnings surpassed expectations, indicating a potential stabilisation in the decline of semiconductor and AI stocks. The US is set to release data on personal income, consumption, and deflators for May today, in addition to the figures for May durable goods orders. The Atlanta Fed’s GDP tracker indicates that growth for Q2 is projected at 3%, a notable increase from the 0.5% recorded in Q4 25 and the 1.6% observed in Q1 26.

It appeared that a decline of 5-6 basis points in the yield of the US two-year note was necessary to stabilise the euro, but this occurred only after the euro dropped to approximately $1.1325, marking its lowest point since May 2025. It exceeded the (38.2%) retracement of the rally from the previous year’s low (~$1.0140), identified at $1.1340, yet ultimately closed above this level. The euro rebounded to nearly $1.1370 before encountering resistance yesterday and has gained a few ticks more today, yet remains below Tuesday’s low of approximately $1.1375. The market persists in maintaining the yen close to its multi-year low, with the dollar positioned just beneath JPY162. Today, it has fluctuated within a range of approximately JPY161.55 to JPY161.90. The actual or historical annualised volatility over the past month stands at approximately 2.85%, marking the lowest level among the G10 currencies. The implied volatility in one-month options stands at approximately 7.5%, ranking among the highest within the G10 economies. The one-month risk reversals indicate a premium for dollar puts, suggesting that longs are purchasing dollar puts for protection. If calls were being sold, implied volatility would be lower.

Sterling was sold to $1.3140 before Europe closed yesterday, marking its lowest level since last November. It steadied in the North American afternoon but could not re-establish a foothold above $1.3180, which is approximately Tuesday’s low. It has approached nearly $1.3200 today. Yesterday’s high was approximately 1.3210, coinciding with the five-day moving average, a level that sterling has not maintained above since June 16.The US dollar extended its streak against the Canadian dollar, rising for the tenth consecutive session yesterday. It approached nearly CAD1.4250 and concluded above Tuesday’s peak. It is consolidating within a narrow range of approximately CAD1.4225 to CAD1.4245 today. The subsequent technical target is approximately CAD1.43. However, we note that US two-year yields and the premium over Canada, which have risen alongside the dollar, have softened for the past two sessions.

The Australian dollar has struggled to maintain even the slightest increases this week. It was sold to new lows late in the session, near $0.6880 yesterday. It has not reached this level since April 6. The Australian dollar closed beneath the lower Bollinger Band for the second consecutive session yesterday. It is consolidating quietly and trading in a narrow range around 0.6900. Nearby support may be in the $0.6860 area, which coincides with the 200-day moving average and the low observed in late March.