The greenback is sitting higher across the board today, making it the lead gainer in the major currencies space. EUR/USD is down 0.2% to 1.1750 where it is brushing up against large option expiries on the day. Meanwhile, USD/JPY is testing waters just above 145.00 as buyers might look interested for another run to test the 100-day moving average (red line) again:
The focus this week switches back to trade headlines and Trump's tariffs once again. For now, the dollar is finding some backing from the non-farm payrolls data last week. But can that really last in the bigger picture?
The commodity currencies are also sitting lower today with US futures pointing to declines at the open for Wall Street later. USD/CAD is up 0.4% to 1.3567 and AUD/USD is down 0.7% back towards the 0.6500 level.
The dollar might be keeping in a firmer spot for now but the coast isn't clear yet. Dollar short positioning being rather crowded is definitely something that could work in the currency's favour on any squeeze higher. However, we've gone through months on end now with the dollar being pressured on multiple fronts amid the ongoing policy volatility and incoherence by the Trump administration.
And with tariffs set to return back into focus again over the next week, that is something to be mindful about.
As an aside, do also keep an eye out on the bond market as 10-year Treasury yields are now running up to near 4.35%. It is pushing up against the confluence of its 100 and 200-day moving averages. The US' fiscal situation is another key factor to consider in all of this and at the balance, it's also a net negative for the dollar currently.
But again, be very mindful of the short squeeze play. We might be overdue on that after having seen the dollar's poor form since April.
This article was written by Justin Low at www.forexlive.com. Read More Details
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