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FOREX: Softer Greenback Sees EURUSD Edge Back Towards 1.06

FOREX
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  • Following the greenback rally pausing for breath on Friday, the USD index also trades softer to start the week, currently down around 0.35% as we approach the APAC crossover. The price action has been assisted by a more stable backdrop for global equity indices, as well as the US 10-year yield once again firmly rejecting the 4.50 level and now residing lower on the day.
  • The EUR trades more optimistically, rising to levels around 1.0600 against the dollar, the notable breakdown point during last week’s trade. The 0.5% move higher for EURUSD does little to alter the overall bearish backdrop, and might be allowing an oversold condition to unwind. On the downside, focus remains on a move to 1.0448, the Sep 3 2023 low and a key support, whereas initial firm resistance to watch is 1.0742, the 20-day EMA.
  • The JPY is among the weakest in G10, briefly helping USDJPY gravitate back above the 155.00 handle, with the currency receiving little support from an appearance from BoJ's Ueda, who declined to provide a clear indication or time-linked path for the next BoJ rate hike.
  • USDCAD has continued its pullback today with a now sizeable drop settling around the 1.4030 level (-0.43%). CAD gains closely follow other growth sensitive peers in the AUD and NOK, along with EUR, potentially offering a slightly less stretched level heading into tomorrow’s Canada inflation report. Support isn’t seen until 1.3959 (Nov 1 and 6 highs)
  • Market focus remains on Trump's cabinet picks, with the Treasury Secretary position still up for grabs. Latest reports suggest that Trump's shortlist is growing, and he is to hold interviews this week with the leading candidates, including (but not limited to) Scott Bessent, Howard Lutnick, Kevin Warsh and Marc Rowan. Their perceived support for Trump's tariff regime will prove key to any market reaction on the formal appointment.
  • RBA minutes headline the docket overnight before the final readings of Eurozone CPI on Tuesday. Attention will then turn to Canada CPI and US building permits data.
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  • Following the greenback rally pausing for breath on Friday, the USD index also trades softer to start the week, currently down around 0.35% as we approach the APAC crossover. The price action has been assisted by a more stable backdrop for global equity indices, as well as the US 10-year yield once again firmly rejecting the 4.50 level and now residing lower on the day.
  • The EUR trades more optimistically, rising to levels around 1.0600 against the dollar, the notable breakdown point during last week’s trade. The 0.5% move higher for EURUSD does little to alter the overall bearish backdrop, and might be allowing an oversold condition to unwind. On the downside, focus remains on a move to 1.0448, the Sep 3 2023 low and a key support, whereas initial firm resistance to watch is 1.0742, the 20-day EMA.
  • The JPY is among the weakest in G10, briefly helping USDJPY gravitate back above the 155.00 handle, with the currency receiving little support from an appearance from BoJ's Ueda, who declined to provide a clear indication or time-linked path for the next BoJ rate hike.
  • USDCAD has continued its pullback today with a now sizeable drop settling around the 1.4030 level (-0.43%). CAD gains closely follow other growth sensitive peers in the AUD and NOK, along with EUR, potentially offering a slightly less stretched level heading into tomorrow’s Canada inflation report. Support isn’t seen until 1.3959 (Nov 1 and 6 highs)
  • Market focus remains on Trump's cabinet picks, with the Treasury Secretary position still up for grabs. Latest reports suggest that Trump's shortlist is growing, and he is to hold interviews this week with the leading candidates, including (but not limited to) Scott Bessent, Howard Lutnick, Kevin Warsh and Marc Rowan. Their perceived support for Trump's tariff regime will prove key to any market reaction on the formal appointment.
  • RBA minutes headline the docket overnight before the final readings of Eurozone CPI on Tuesday. Attention will then turn to Canada CPI and US building permits data.