FOREX: Significant Risk Recovery Places US Dollar on Firmer Footing
Apr-22 17:15
- Monday’s sharp extension of greenback weakness prompted the USD index to print fresh 3-year lows below the 98.00 mark. Despite an initial selloff on Tuesday, these lows remained untested and the subsequent powerful rebound for risk sentiment has provided a solid boost to the dollar, rising against all G10 peers on the session as we approach the APAC crossover.
- Despite the meagre 0.3% advance on the session, a lot of the commentary has been centred around USDJPY, which briefly printed below the psychological 140.00 mark. The pair’s selloff did fall short of the September lows, located at 139.58 – as this area appears to have assisted the short-term recovery, with spot consolidating around the 140.70 mark for much of the session, before catching an additional bid on the latest Bessent headlines on a China deal being possible - to reach session highs above 141.30. Resistance remains much further out at 143.28 initially, the April 16 high.
- Low liquidity moves on Monday may have exacerbated the price action for the dollar, and the powerful turnaround for US equities on Tuesday might suggest that a lot of bad news was priced into the market, leaving the greenback susceptible to a short-term correction. USDCHF has risen 1.1% to 0.8180 in sympathy, while EURUSD has extended its pullback to 1.1435.
- The close linkage between US-tied assets means the higher beta currencies in G10 have relatively underperformed, with the likes of AUD, NZD and GBP remaining moderately lower on the Tuesday. It is worth noting that a negative close for GBPUSD today would halt a consecutive winning streak of ten days for the pair. Support will be found at the prior breakout at 1.3207.
- Wednesday’s calendar will be highlighted by flash European PMIs as markets also eagerly await any Fed speak following Trump’s vociferous attacks on the central bank.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
CANADA PM CARNEY TO MEET GOVERNOR GENERAL AT NOON
Mar-23 11:22
- CANADA PM CARNEY TO MEET GOVERNOR GENERAL AT NOON
- CARNEY EXPECTED TO SEEK ELECTION
US TSYS: Available "Extraordinary Measures" Pick Up Slightly From Lows
Mar-21 21:00
Treasury has $163B of "extraordinary measures" remaining for authorities to use to fend off hitting the debt limit as of March 19, per the latest release of Treasury data. That's up from $86B on Mar 17 and a low of $34B on Feb 24.
- That's a little under half of the $377B in measures available to Treasury, with most of the amount remaining ($143B) coming from the so-called "G Fund".
- This headroom is in addition to $416B in cash left in the TGA, at last count.
- We haven't seen any changes recently to "x-dates" by when Treasury will run out of cash until the debt limit is lifted.
- Consensus still centers around late July/early August, but much will depend on April's major mid-month tax take. Treasury wrote to Congress last week that they would be able to provide an update on the x-date in the first half of May, after the conclusion of tax season.
USDCAD TECHS: Short-Term Outlook Remains Bullish
Mar-21 21:00
- RES 4: 1.4793 High Feb 3 and key resistance
- RES 3: 1.4700 Round number resistance
- RES 2: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 1: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- PRICE: 1.4345 @ 16:27 GMT Mar 21
- SUP 1: 1.4242 Low Mar 6 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD is trading closer to its recent lows. The bull cycle that started Feb 14 remains intact and moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Note that the latest pullback has exposed a near-term key support at 1.4242, the Mar 6 low. Clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. The bull trigger is 1.4543, the Mar 4 high.
