Dollar trading sideways

Currency markets continue their sideways trading

Currency markets remained steady once again overnight and seem to be finding the back-and-forth histrionics in the stock and bond markets a bit tiresome. Currency markets seem to be adopting a step out of the noise, wait-and-see approach into the end of the week. ​ Thanks to a rise by the yen and a fall by the euro cancelling each other out, the dollar index remains almost unchanged on a 24-hour basis at 104.29 today. The dollar index has support at 1.0350 with resistance now distant at 1.0570.

EUR/USD fell by 0.45% to 1.0520, creeping up to 1.0530 in slow Asian trading. It is showing surprising resilience as the Russian natural gas exports to Europe situation deteriorates. Because of this, risks have shifted to the downside for the single currency. It has initial resistance at 1.0600, with challenging resistance at 1.0650. Support is at 1.0450 and 1.0400. Sterling probed the 1.2200 downside once again overnight but is almost unchanged over the past 48 hours at 1.2275 in Asia. GBP/USD has initial resistance at 1.2360 and 1.2400, with support at 1.2200, 1.2160, and then 1.1950.

USD/JPY mechanically fell by 0.93% to 134.95 overnight in lockstep with lower US yields. In Asia, it has eased to 134.70. If bond yields ease again tonight, a deeper correction by USD/JPY is possible, potentially targeting the 132.00 regions. ​ USD/JPY has support at 134.25 and 132.00, with resistance at 136.65 and 138.00.

AUD/USD and NZD/USD were mostly unmoved overnight. Overnight, AUD/USD has eased by around 0.40% overnight to 0.6900, while NZD/USD is unmoved at 0.6295 thanks to a local holiday. Both are finishing the week near their lows and risk more losses in New York time if sentiment remains negative. Support is at 0.6850 and 0.6200 respectively.

Asian currencies finished almost unchanged overnight, but with USD/Asia remaining near recent highs. That reflects fears that a US recession will have an immediate knock-on impact on Asian growth and notably, lower US yields and a stock market recovery this week have given no support to local currencies. Looking at the price action overnight and today, I wouldn’t be at all surprised if quite a few of the region’s central banks are quietly on the offer, capping the USD/Asia upside.

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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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