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Greenback Turns Lower Across US Hours, EURCHF Extending Bounce

FOREX
  • After touching the best levels of the year at 105.10 overnight, the USD index has turned lower over the course of the Tuesday session, currently down around 0.25%. Moves have been eating into the greenback’s post ISM advance on Monday and have been underpinned by weaker durable goods data and poor revisions offsetting the slightly better February JOLTS job openings.
  • The dollar’s turnaround comes amid CFTC data, covering positioning as of the Tuesday close, indicating markets swung their net USD position short for the first time since 2021, potentially exposing the currency to corrective episodes over US economic data releases.
  • Weakness for major equity benchmarks has done little to impact the G10 currency space Tuesday, evidenced by AUD being one of the best performers and rising 0.35%. Despite this, the reversal lower on Mar 21 reinstated a bearish threat and has exposed 0.6478, the Mar 5 low. Clearance of this level would open the key support and bear trigger at 0.6443, the Feb 13 low.
  • CHF is the poorest performer in G10 Tuesday, prompting EUR/CHF to recover well off pullback lows printed late last week. This keeps the cycle high and bull trigger well within range at 0.9820, a level that could come into play should ECB rate cut pricing follow the lead of the Fed gyrations so far this week. OIS markets currently price ~93bps of rate cuts from the ECB for this year.
  • The JPY remains notably quiet as markets continue to grapple with the still wide yield differentials compared to G10 counterparts and the potential for the BOJ to intervene in the currency. USDJPY trades within 40 pips of 152.00, a key multi-decade resistance zone that continues to cap the pairs topside momentum.
  • Eurozone inflation readings take centre-stage on Wednesday, before US ADP and ISM Services data. Fed Chair Powell is due to speak at Stanford's Business, Government, and Society Forum, although the focus for global markets remains firmly on Friday’s US employment report.
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