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FOREX: USD Weakness Prevails Following Reports of No Imminent Tariffs

FOREX
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  • There was a substantial weakening of the US dollar on Monday, as reports from the Wall Street Journal detailed that President Trump was planning to issue a broad memorandum Monday that directs federal agencies to study trade policies, but stopped short of imposing new tariffs on his first day in office. Trump officials later corroborated the reports.
  • The greenback was immediately lower on the headlines, and despite being off its worst levels, the USD index remains around 1% lower on the session.
  • There has been broad based strength across G10 currencies against the dollar, however, EUR and NZD are outperforming at the margin. EURUSD rose to a session high of 1.0430 on the report as post-election positioning is taken into account and unwound. Initial resistance levels at 1.0338 and 1.0354 have been breached and the pair traded within 7 pips of 1.0437 resistance, the Jan 6 high.
  • AUDUSD has risen above initial firm resistance in tandem, breaching the 20-day EMA and recording a high of 0.6287. The 50-day EMA is at 0.6335 and should be the next target barring any reversal of the current tariff rhetoric in place.
  • With the strong positive price action for major equity indices, USDJPY is only 0.3% lower on the session at 155.85 as we approach the APAC crossover. Positive risk sentiment is boosting cross/JPY here and may be in focus as the BOJ decision approaches this week.
  • Uk labour market data and Canadian CPI highlight the economic calendar on Tuesday.
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  • There was a substantial weakening of the US dollar on Monday, as reports from the Wall Street Journal detailed that President Trump was planning to issue a broad memorandum Monday that directs federal agencies to study trade policies, but stopped short of imposing new tariffs on his first day in office. Trump officials later corroborated the reports.
  • The greenback was immediately lower on the headlines, and despite being off its worst levels, the USD index remains around 1% lower on the session.
  • There has been broad based strength across G10 currencies against the dollar, however, EUR and NZD are outperforming at the margin. EURUSD rose to a session high of 1.0430 on the report as post-election positioning is taken into account and unwound. Initial resistance levels at 1.0338 and 1.0354 have been breached and the pair traded within 7 pips of 1.0437 resistance, the Jan 6 high.
  • AUDUSD has risen above initial firm resistance in tandem, breaching the 20-day EMA and recording a high of 0.6287. The 50-day EMA is at 0.6335 and should be the next target barring any reversal of the current tariff rhetoric in place.
  • With the strong positive price action for major equity indices, USDJPY is only 0.3% lower on the session at 155.85 as we approach the APAC crossover. Positive risk sentiment is boosting cross/JPY here and may be in focus as the BOJ decision approaches this week.
  • Uk labour market data and Canadian CPI highlight the economic calendar on Tuesday.