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Greenback Pressure Extends Ahead Of US CPI, DXY Down 0.9%

FOREX
  • Despite equity markets stabilising throughout the US session on Monday, the substantial moves across fixed income markets and the related Fed re-pricing have continued to weigh on the greenback, with the USD index looking set to close with a 1% decline as we approach the APAC crossover.
  • Punchy ranges have been witnessed across the G10 currency space, none more so than for USDJPY which printed a low of 132.29 from overnight highs of 135.08. Lower core rates and the associated narrowing of interest rate differentials key here. Despite a bounce into the close, USDJPY still resides down 1.15%.
  • With more stable price action for equity markets in Monday’s US session, the Australian dollar has been able to capitalise on the broad greenback weakness, with AUDUSD now ~1.5% higher as we approach the APAC crossover. Despite this climb, the trend condition remains bearish for now and initial firm resistance remains defined at 0.6784, the Mar 1 high.
  • Spot USD/CNH (-1.30%) is consolidating sharp losses on Monday. The pair briefly tried below its 50-DMA, intersecting today at 6.8373, which has underpinned price action since mid-February. A close under the March 01 low of CNH6.8634 would mark the completion of a double top formation, with the bearish theme being reinforced by a sustained move through the 50-DMA.
  • Elsewhere in emerging markets, substantial volatility was seen in the Mexican peso, with USDMXN briefly spiking back above the 19.00 handle. The pair has advanced 2.25% on Monday and MXNJPY had been down as much as 5.3% at worst levels.
  • Focus turns to Tuesday’s US inflation data, made more interesting by the plethora of Fed view changes for the March decision that have crossed the newsfeeds today.
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