US dollar steady after US holiday

Currency markets trade sideways over the US holiday

Not a lot has changed in currency markets overnight despite some decent intraday ranges. The US holiday and a slow news reel ensured that currency traders took the option of easing into the week, awaiting the US return this evening. The dollar index edged 0.16% to 104.48 overnight, easing another 0.14% to 104.34 in Asia. thanks mostly to a weak yen. The dollar index has support at 1.0350 with resistance now distant at 1.0570.

EUR/USD rose just 0.17% to 1.0511 overnight, adding another 10 pips to 1.0525 in Asia. It has initial resistance at 1.0600, with challenging resistance at 1.0650. Support is at 1.0450 and 1.0400 now although I note that EUR/USD has based twice at 1.0350. That leaves the door open slightly to a corrective recovery this week. Sterling rose just 0.27% to 1.2248 overnight, edging 0.20% higher to 1.2270 in Asia. ​ GBP/USD has initial resistance at 1.2360 and 1.2400, with support at 1.2200 and then 1.1950.

USD/JPY is holding steady at 135.00 today, almost unchanged for the past 24 hours. It is likely awaiting the reopening of the OTC US bond market this evening. It once again failed ahead of 135.45 overnight and the 135.45/60 region is shaping up as decent resistance now. ​ Unless US yields move higher again this week, the odds of a USD/JPY correction lower are rising. USD/JPY has support at 134.50 and then 132.20.

AUD/USD and NZD/USD have booked modest gains to 0.6975 and 0.6345 over the last 24 hours, with trading volumes muted, but a tentative rise in sentiment proving supportive to both. A US holiday has dampened volumes but both Australasians have traced out bottoming patterns on the charts. As long as 0.6850 and 0.6200 hold respectively, further gains to 0.7150 and 0.6450 cannot be ruled out.

Asian currencies are barely changed overnight as regional markets await the return of the US later today. Noises from officials in Seoul and Tokyo about currency speculation are probably limiting US dollar gains for now. Two notable exceptions are the Indonesian rupiah and Philippine peso, with weakened sharply by around 0.65% to USD 14,825.00 and USD 54.10 overnight. It is no coincidence that both have monetary policy meetings this week and both are reluctant rate hikers, as they prioritise the pandemic recovery. More selling pressure this week could force their hand on Thursday, but if both hold policy unchanged, could see more waves of selling into the end of the week.

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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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