The US dollar continues to rise

The US dollar continued gaining on Friday as firm US data pushed US yields higher. The dollar index rose 0.22% to 98.57 where it remains in Asia, where a China holiday is impacting trading volumes. The index remains mid-range between key support/resistance at 97.70 and 99.45. A sustained break of those levels will signal the dollar’s next directional move. With US yields continuing to firm at the short end of the curve, the US dollar will remain well supported on dips.

EUR/USD continued retreating from its mid-week foray to 1.1200 on Friday, slipping 0.15% to 1.1050, where it remains in Asia. With no positive developments from Eastern Europe over the weekend, risk remains skewed to the downside once again. Immediate support/resistance are 1.0950 and 1.1200.

The US/Japan rate differential widened on Friday and that saw the yen retreat sharply after gaining temporary support last week on year-end repatriation flows and BOJ yield curve operations. USD/JPY rose 0.70% to 122.50, climbing to 122.65 in Asia today. USD/JPY looks to have weathered to correction lower and pressures will now continue building on the topside. Key levels are 121.25 and 123.25.

Aussie eyes RBA meeting

AUD/USD continues to be bolstered by firm commodity prices, AUD/JPY buying and expectations that the RBA could roll back its dovish policy outlook at tomorrow’s rate decision. AUD/USD remains near the top of its range at 0.7515 today. A rise through 0.7550 will signal further gains targeting 0.7700. NZD/USD is at 0.6935 today, some 70 points from its recent highs. AUD/NZD buying is capping gains and it needs to rise through 0.7000 to signal renewed upside momentum.

A China holiday today and tomorrow will dampen trading volumes in the first part of the week. Asian currencies weakened slightly on Friday, but mostly, continue to range trade waiting for directional signals from elsewhere. Widening virus restrictions in China will be an additional headwind for Asian currencies, and the continuing rise in US yields means down pressures are continuing to build as well.

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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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