Forex News

Rabobank’s Senior FX Strategist Jane Foley notes the US Dollar Index (DXY) is trading near key moving averages, with markets reluctant to extend USD longs despite renewed Middle East tensions. Foley still sees scope for the Dollar to move higher in coming weeks, even as they expect Federal Reserve (Fed) rate cuts later this year to moderately weigh on USD against the Euro.

Dollar holds near key resistance

"The DXY dollar index is currently positioning almost on top of its 100- and 200-day smas which are at 98.479 and 98.568 respectively. For now these levels are providing some resistance which is reflecting the market’s reluctance to lengthen USD positions."

"However, it appears that the market is reluctant to push the dollar higher again, given risk that these gains could again be swiftly unwound. For now we continue to see risk that the USD can move higher in the coming weeks."

"In our view, the USD’s safe haven credentials are based around liquidity. This is unmatched by any other currency, and it drives the use of the greenback in transactions around the world."

"In Rabobank’s view the Fed is likely to cut rates further this year. This could undermine the USD moderately against the EUR on a 3 to 6 month view."

"Consequently, we do not expect the market to rebuild long EUR positions back to last year’s levels and expect any up move in EUR/USD in H2 to lack strong conviction."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• US Job Openings declined slightly in March to 6.866 million.
• DXY slips to near 98.40 after the release of US JOLTS data.

The number of job openings in the United States (US) printed at 6.866 million in March, down from the revised 6.922 million in February, the US Bureau of Labor Statistics (BLS) reported in its Job Openings & Labor Turnover (JOLTS) report on Tuesday. This reading came in above the market expectation of 6.83 million.

"Over the month, hires increased to 5.6 million, and total separations changed little at 5.4 million," the BLS noted in its press release. "Within separations, quits (3.2 million) were little changed while layoffs and discharges (1.9 million) were also little changed."

Market Reaction

The US Dollar Index (DXY) ticked lower to near the 98.46 price zone with the release of US data, as the country also published the ISM Services Purchasing Managers Index (PMI) that missed expectations.

Brown Brothers Harriman’s (BBH) Elias Haddad reports that the Australian Dollar (AUD) fell after the Reserve Bank of Australia (RBA) delivered a widely expected 25 bps hike to 4.35% and signalled a data‑dependent pause. With trimmed mean inflation projected above target until mid‑2027 and growth downgraded, Haddad expects limited repricing of cash rate futures and sees AUD/USD struggling to sustain gains above 0.7200 despite Australia’s positive energy balance.

RBA hike but cautious outlook weighs

"RBA raised rates as expected and signaled a data-dependent pause. Governor Michele Bullock stressed “One reason to increase interest rates was to give ourselves space now to sit and see what happens.”"

"The RBA voted 8-1 to deliver a third consecutive 25bps hike to 4.35%. Cash rate futures implied 80% odds of a hike today. According to the RBA “inflation is likely to remain above target for some time and that the risks remain tilted to the upside, including to inflation expectations.”"

"Indeed, the RBA projects its policy-relevant trimmed mean inflation to remain above the bank’s 2-3% range until mid-2027 (vs. end-2026 previously), as fuel-related cost increases are passed through to consumer prices."

"Market participants expect the cash rate to increase by 35bps to 4.70% by the end of 2026. We see limited scope for a big upward adjustment in the cash rate futures curve for two reasons. First, the RBA slashed Australia’s growth outlook, now seeing real GDP growth running below potential throughout the forecast horizon. Second, the cash rate currently sits within, but near the top of, the range of model-based central estimates of the nominal neutral rate."

"AUD/USD will struggle to sustain a break above key resistance at 0.7200. Still, Australia’s positive energy balance (production minus consumption) will continue to offer AUD a relative edge versus EUR and JPY."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) is slightly firmer with USD/CAD holding near prior ranges. A softer US Dollar (USD) and firmer risk appetite are seen as mildly supportive for the CAD, while fair value has shifted lower toward 1.3424. Technicals remain bearish, with focus on a move back toward the 1.35 area.

CAD supported as fair value drops

"The CAD is edging a little firmer in early trade here but spot is holding close to yesterday’s ranges. A somewhat softer USD and some potential firming in risk appetite should be mildly CAD-supportive in the short run"

"Broader factors continue to tilt positively for the CAD, driving our fair value estimate for spot lower to 1.3424 this morning. The USD remains close to 1 standard deviation above its equilibrium estimate which should help limit USD gains and maintain a mild downward bias on spot at least."

"Bearish—Minor USD gains overnight topped out around 1.3625/30, former support (76.4% Fibonacci of the USD’s March rally)."

"The sustained break under retracement support plus the bearish alignment of trend oscillators across the intraday, daily and weekly studies maintains our focus on the potential for USD losses to extend back to the early March low at 1.3525 now."

"A collection of lows and weekly trend support at 1.3520 may bolster USD support around 1.35."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• ISM Services PMI recedes to 53.6 in April, slightly below consensus.
• The US Dollar trades slightly on the defensive on Tuesday.

Economic activity in the US services sector lost some momentum in April, with the ISM Services PMI easing to 53.6 from 54 in the previous month, coming in below analysts' expectations.

Further poll results found that the Prices Paid Index, a crucial barometer of inflation, held steady at 70.7, while the Employment Index rose to 48 from 45.2, indicating a modest improvement in labour market conditions in the services sector. Finally, the New Orders Index weakened to 53.5 from 60.6.

Market reaction

The Greenback navigates an inconclusive range following the release, with the US Dollar Index (DXY) alternating gains with losses in the 98.50-98.40 band.