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US Dollar Under Pressure, Cross-JPY Remains Supported

  • Broad greenback weakness continued across markets as most G10 counterparts rose to their best levels of the week. The DXY is down 0.4% and completes its third consecutive daily decline, slowly eroding into last Friday’s advance.
  • Outlier in this respect is the Japanese Yen which largely represents the extended bid for cross-JPY as equities extended their bounce with overall fears surrounding the Omicron variant waning. AUDJPY, NZDJPY and GBPJPY have all risen just shy of one percent.
  • With the Aussie leading the charge in risk, it is worth highlighting the move away from 0.7090 short-term support, bolstering the medium-term outlook for a further recovery from a strong inflection point around 0.6995. Clearance of last week's high of 0.7224 on Dec 16 is needed to trigger a resumption of bullish activity.
  • EURUSD broke a cluster of highs just above the 1.13 mark, rising to highs of 1.1342 and approaching last week’s peak at 1.1360. Key resistance, however, at 1.1383 is intact, Nov 30 high. A break of this hurdle is required to signal potential for a stronger recovery towards 1.1407 the 50-day EMA.
  • Despite the looming holiday break – plenty of data for markets to assess tomorrow. Core PCE Price Index as well as durable goods headline the US calendar. In Canada, October GDP will be released.

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