USD remains supported due to the Fed’s (Federal Reserve) active monetary policy

• The euro fell on Tuesday unable to hold on to the post-French election gains
• The dollar held firm supported by high U.S. yields ahead of inflation data expected
• The greenback has gained almost 10% versus the yen in the past three months

Forex market

The euro fell today unable to hold on to the post-French election gains, as the dollar held firm supported by high U.S. yields ahead of inflation data expected to reinforce bets of aggressive monetary tightening. The euro fell 0.19% to $1.08625, after surging the previous day to $1.09550 on the news that incumbent President Emmanuel Macron beat far-right challenger Marine Le Pen in the first round of presidential voting. 

But ahead of U.S. inflation data, which is expected to show that prices gained the most in over 16 years, the dollar index edged 0.12% higher to 100.15, after hitting a fresh May 2020 high. USD remains supported due to the Fed’s (Federal Reserve) active monetary policy, but a lot has been priced in as regards monetary policy so the USD is probably going to find it increasingly difficult to appreciate further. 

Economic Calendar

The dollar's recent gains against the Japanese yen have been it's most striking. The greenback has gained almost 10% versus the Japanese currency in the past three months. It was trading 0.25% higher at 125.63 yen today, very close to a June 2015 high of 125.77 touched on the previous day. Japanese Finance Minister Shunichi Suzuki said the government was closely watching the yen and that excess volatility and disorderly movements could have an adverse effect on the economy and financial stability. 

The dollar also gained on the offshore Chinese yuan, reaching a two-week high of 6.390 before softening. U.S. consumer prices likely increased by the most in 16-1/2 years in March, according to a Reuters poll of economists, as the war in Ukraine pushed the cost of gasoline to record highs. Ahead of the data release due later today, U.S. longer-term yields inched higher, with the yield on benchmark 10-year notes rising to its highest since December 2018 at 2.8360%. Sterling dropped 0.17% after UK employment data showed the jobless rate slipped further below.

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Euro-EUR

The single currency is unable to hold on to the post-French election gains, as the dollar held firm supported by high U.S yields ahead of inflation data expected to reinforce bets of aggressive monetary tightening. The euro fell on the news that President Emmanuel Macron beat far-right challenger Marine Le Pen in the first round of presidential voting. Overall, the EUR/USD traded with a low of 1.0835 and a high of 1.0890 before closing the day around 1.0874 in the New York session.

Japanese Yen-JPY

The Japanese Yen has lost almost 10% versus the U.S Dollar in the past three months. Japanese policymakers warned today against any rapid moves in the foreign exchange market, underscoring the importance of stability as authorities kept a wary watch on the yen after it slumped to six-year lows against the dollar. Overall, the USD/JPY traded with a low of 123.64 and a high of 124.65 before closing the day around 124.28 in the U.S session.

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British Pound-GBP

The British Pound fell yesterday against the euro and the dollar after data showed the UK economy slowed more sharply than expected in February. Monthly gross domestic product rose by 0.1% in February, down from 0.8% growth in January. A poll of economists had forecast a 0.3% increase. Sterling initially drifted lower in the wake of the data miss. Overall, the GBP/USD traded with a low of 1.2980 and a high of 1.3084 before closing the day at 1.3032 in the New York session.

Canadian Dollar-CAD

The Canadian Dollar weakened against the greenback yesterday and the yield on benchmark government debt climbed. Canadian government 10-year bond yields rose 7 basis points to 2.704%. The yield on similar U.S government benchmark debt rose to 2.7801%. U.S May crude futures fell $3.97 to settle at $94.29 a barrel yesterday. Overall, USD/CAD traded with a low of 1.2562 and a high of 1.2616 before closing the day at 1.2577 in the New York session.

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Australian Dollar-AUD

The Australian Dollar has drifted a bit lower during the trading session yesterday, as we continue to see a bit of negativity. However, there is at least a little bit of a fight left in the currency. The Reserve Bank of Australia had dropped the word “patience” from its statement and that had people thinking that perhaps they were much closer to raising interest rates than originally thought Overall, AUD/USD traded with a low of 0.7358 and a high of 0.7416 before closing the day at 0.7410 in the New York session.

Euro-Yen EUR/JPY

EUR/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also issuing a bullish stance. The Relative Strength Index is above 61 and lies above the neutral zone. In general, the pair has gained 0.24%.

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Sterling-Yen GBP/JPY

Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 60 reading and lies above the neutral zone. On the whole, the pair has lost 0.03%.

Aussie-Yen AUD/JPY 

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 76 reading and lies above the neutral region. In general, the pair has gained 0.01%.

Euro-Sterling EUR/GBP

This cross is currently trading above 14, 50 and below 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 53 and lies below the neutral region. Overall, the pair has gained 0.29%.

Sterling-Swiss GBP/CHF

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 45 and lies below the neutral region. In general, the pair has lost 0.31%.

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