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FOREX: Greenback on Front Foot, USD Index Rises 0.5%

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  • After two sessions of declines to start the week, the greenback traded on a much firmer footing on Wednesday. The Ice dollar index has risen half a percent, and its recovery bolsters the underlying bullish trend for the greenback, seen both in the lead up to the election and gathering momentum in its aftermath.
  • While the Scandinavian currencies are the weakest in G10, the Euro weakness has been most notable across the majors. EURUSD topside has been capped at the prior breakdown point of 1.06 and todays steady grind lower saw the pair come within 10 pips of the post-election lows at 1.0497. While the pair remains vulnerable to further downside, the 2023 lows at 1.0448 will remain a short-term focus, especially ahead of Friday’s Eurozone PMI data.
  • Additionally, EURCAD continued its decline following Tuesday’s Canada inflation data. The cross is now approaching the post-election lows at 1.4712 and further downside momentum would turn the focus to the June lows around the 1.4600 mark. Retail sales data in Canada is also scheduled on Friday.
  • GBP weakness through to the London close picked up slightly, with GBPUSD touching a new pullback low, but perhaps more notably GBP/JPY erasing the entirety of the day's early gains at the close to trade flat. BOE’s Ramsden comments erred dovish, however were broadly in line with his expected stance, keeping him in the 'gradual' MPC camp for now, but seeing a risk of a requirement for faster cuts.
  • USDJPY extended its recovery off the Tuesday lows, reaching an intra-day peak of 155.89. However, softer equity markets prompted a pullback towards 155.25 ahead of the APAC crossover. Moving average studies are in a bull-mode position highlighting a dominant uptrend and sights are on 156.75 and 156.88 next, a Fibonacci projection.
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  • After two sessions of declines to start the week, the greenback traded on a much firmer footing on Wednesday. The Ice dollar index has risen half a percent, and its recovery bolsters the underlying bullish trend for the greenback, seen both in the lead up to the election and gathering momentum in its aftermath.
  • While the Scandinavian currencies are the weakest in G10, the Euro weakness has been most notable across the majors. EURUSD topside has been capped at the prior breakdown point of 1.06 and todays steady grind lower saw the pair come within 10 pips of the post-election lows at 1.0497. While the pair remains vulnerable to further downside, the 2023 lows at 1.0448 will remain a short-term focus, especially ahead of Friday’s Eurozone PMI data.
  • Additionally, EURCAD continued its decline following Tuesday’s Canada inflation data. The cross is now approaching the post-election lows at 1.4712 and further downside momentum would turn the focus to the June lows around the 1.4600 mark. Retail sales data in Canada is also scheduled on Friday.
  • GBP weakness through to the London close picked up slightly, with GBPUSD touching a new pullback low, but perhaps more notably GBP/JPY erasing the entirety of the day's early gains at the close to trade flat. BOE’s Ramsden comments erred dovish, however were broadly in line with his expected stance, keeping him in the 'gradual' MPC camp for now, but seeing a risk of a requirement for faster cuts.
  • USDJPY extended its recovery off the Tuesday lows, reaching an intra-day peak of 155.89. However, softer equity markets prompted a pullback towards 155.25 ahead of the APAC crossover. Moving average studies are in a bull-mode position highlighting a dominant uptrend and sights are on 156.75 and 156.88 next, a Fibonacci projection.