US dollar edges higher in sleepy market

Currency markets are quiet after US dollar gains overnight

With markets generally in consolidation mode, the US dollar clawed back some of its recent losses overnight, with the dollar index rising 0.30% to 96.34. The trend was most noticeable in recent outperformers, with the AUD/USD and NZD/USD both falling 0.50%. Elsewhere amongst the majors though, the effect of the stall in momentum was much more benign, with EUR/USD edging back below 1.1400 to 1.1390.

I note now that NZD/USD has formed quite strong technical resistance at 0.6600, having failed ahead of it three times over the past week. The 0.7000 region has become somewhat of an intra-day pivot point for AUD/USD, which seems content to range between 0.6970 and 0.7030 for now.

The Bank of Indonesia has been officially intervening to sell USD/IDR this morning. The BI has been a vocal interventionist in recent months, with the central bank making clear it felt to rupiah was undervalued. The USD/IDR is unchanged at 14,630.00 today, suggesting that the BI action this morning are more smoothing than drawing a line in the sand.

Across Asia, the US dollar has edged gently lower versus the majors as Asian stock markets hold their own. Asian regional currencies are virtually comatose today, being unchanged versus the greenback.

With the EU Summit convening today on the pandemic recovery package, most eyes will be on EUR/USD. A positive outcome should see the single currency retest the week’s highs at 1.1450. An unfavourable outcome will see the 1.1370 support tested and a potentially deeper correction, possibly as far as 1.1300.

However, signals of forward progress should be enough to keep the euro firm versus the US dollar and sterling. That said, a breakdown in progress could set the single currency up for a negative finish, with so much forward momentum already priced into it.

The data calendar in Asia today is very quiet, as it is across Europe and the United States. Earnings season has passed without incident this week and looks set for much of the same this evening.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

Latest posts by Jeffrey Halley (see all)