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, 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.