The US dollar marks time

US dollar trading sideways

The overnight session saw some wide ranges in both the dollar index and the major currencies, as quarter and month-end flows dominated. With the Biden infrastructure package passing without incident on the US bond market, the US dollar gave back some of its week’s gains. Despite a near 50 point range, the dollar index finished almost unchanged at 93.23, edging lower to 93.21 in moribund pre-holiday Asian trading.

Taking a look at the major currencies, EUR/USD’s intraday rally petered out above 1.1770 and it has faded back to 1.1725 in Asia. That leaves it still in danger, just above support at the round number of 1.1700. GBP/USD continues to hold firm at 1.3785, supported by EUR/GBP selling as sterling continues to benefit from its vaccine premium. USD/JPY has corrected lower to 110.60 today, unwinding its overbought short-term technical indicators yesterday. It still has the potential to retest 111.00 and then 112.00 before the week’s end.

The Ontario lockdown has seen USD/CAD rise by 0.20% to 1.2590 in Asia, and once again, the pair has bounced off its longer-term support line, today at 1.2530. The Ontario situation is a developing story, and with USD/CAD having spent a week now above its technical breakout point, it is set to retest 1.2650 into the weekend.

The Australian and New Zealand dollars continue to wallow at the bottom of their ranges at 0.7575 and 0.6970, respectively. Neither commonwealth has managed to recapture previous support, pointing to deeper losses in the week ahead. As barometers of global risk appetite, their unimpressive price action by both is as good an indicator that further US dollar strength is on the way as any.

Asian currencies are having a quiet session, with the US dollar modestly stronger versus the grouping today. With much of the region on holiday tomorrow, I expect them to stay in wait-and-see mode ahead of the US data tomorrow night.

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, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was 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 and Channel News Asia as well as in leading print publications such as 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

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