XE Market Analysis: Asia - Apr 06, 2021

The Dollar was mostly lower on Tuesday, though Sterling was the notable exception, as Cable lost ground to the USD through the session. The DXY printed two-week lows of 92.38, briefly trading under its 200-day moving average, which is currently at 92.441.There was little in the way of data to impact the market, and it appeared softer Treasury yields weighed down the Greenback generally. Wall Street was narrowly mixed, taking a breather from its record run-up on Monday. Continued firming in recovery expectations, combined with growing expectations for another big spending package from Washington, an ultra-accommodative Fed and ongoing progress on vaccinations should continue to support equities, and for now, the Dollar as well. Wednesday's U.S. calendar is light, though features the February trade report and the minutes from the March 16-17 FOMC meeting.

[EUR, USD]
EUR-USD headed modestly higher, topping at two-week highs of 1.1857, up from pre-open lows of 1.1795. The move appeared to have been the result of softer U.S. Treasury yields, and firmer Bund rates. With little in the way of data today, the small narrowing in rate differentials may have weighed on USD sentiment somewhat. The 20-day moving average at 1.1853 was breached, leaving the 50-day moving average at 1.1884 the next resistance level, with support now at 1.1795.

[USD, JPY]
USD-JPY has dropped to seven-session lows of 109.67, down from opening highs near 110.40, and an overnight peak of 110.57. Softening Treasury yields have weighed on the rate sensitive pairing this morning, and the USD overall remains under some pressure, with the DXY touching 10-session lows. The index has bottomed at 92.45 so far, and is approaching the 200-day moving average, which currently sits at 92.41. A break below there could see the Greenback lose further ground.

[GBP, USD]
Cable bucked the trend on Tuesday, losing ground as the Dollar largely fell versus the other major currencies. The pairing bottomed at 1.3818 after earlier printing an 18-day high at 1.3920. We remain bullish on the pound, especially against the euro and yen. Sterling yesterday printed a 14-month high versus the euro, which although occurring in holiday-thinned trading reflected the contrasting fortunes of the reopening UK economy with the re-restricted economies across the Channel.

[USD, CHF]
The SNB maintained its expansionary policy stance. The statement stressed that the pandemic "is continuing to have a strong adverse effect on the economy", adding that despite the "recent weakening, the Swiss franc remains highly valued" and against that background the policy rate was held at -0.75% and the bank stressed that "it remains willing to intervene in the foreign exchange market as necessary". The bank will also continue to supply the banking system with liquidity on "generous" terms. Nothing really new there, despite the fact that the SNB lifted its conditional inflation forecast on the back of higher oil prices and a weaker CHF. EUR-CHF has held above the key 110.00 level for over a month now.

[USD, CAD]
USD-CAD has bounced from overnight lows of 1.2517, peaking at 1.2575 into the North American open, and since dipping under 1.2540. Relatively weak oil prices saw the pairing rise from the two-week lows of 1.2502 lows seen on Monday, though gains have been limited by a generally softer USD, as the DXY printed nearly two-week lows of 92.53 earlier in the session. Overall, the FX market looks to be in consolidation mode today, with narrow trading ranges the rule.