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Greenback Extends Downtrend, USD Index Pressing Towards 2023 Lows

FOREX
  • Following the marginally below-estimate US inflation data, pressure remained on the US dollar on Wednesday as the DXY continues to gravitate towards last week’s lows around 101.45 and has the 2023 lows as the next obvious target. The FOMC minutes release had close to zero effect on currency markets as Wednesday’s session drew to a close.
  • The Euro and Swiss franc are outperforming. USDCHF (-0.85%) has cracked support at 0.9000 handle, marking a resumption of the broader downtrend that started from the Oct 2022 high of 1.0148. The break lower signals scope for weakness towards 0.8926 and 0.8871, the Feb 16 2021 low.
  • In similar vein, both EURUSD and GBPUSD are hugging session highs and remain in close proximity of the 2023 peaks of 1.1033 and 1.2525 respectively. For cable, this level marks the bull trigger to resume the next stage of the medium-term uptrend. Additionally, both SEK and NOK have gained over 1% against the greenback, retracing the entirety of yesterday’s weakness amid the firmer commodity/oil backdrop.
  • With US yields retracing a solid portion of their initial move following the US data, the Japanese yen is broadly underperforming across G10, with moderate weakness against the greenback but lower on the day against a host of other currencies.
  • Australian employment data headlines the overnight docket before final German CPI and UK GDP in Europe. The US session will look at PPI data for March as well as the latest jobless claims figures.
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