The US dollar's recent slide intensified today, showing broad losses across major currencies. While it weakened yesterday, today's decline is more pronounced, with losses against all G10 currencies and nearly all emerging market currencies. A key factor behind this sell-off is speculation that a new Federal Reserve Chair might be announced within months, which unsettled investors. Market expectations for interest rate cuts have also shifted—there’s a 25% chance of a July cut, and nearly 63 basis points of easing priced in for the rest of the year. Combined with quarter-end flows and upcoming tariff uncertainties, pressure on the dollar remains strong.
Asia Pacific Markets
In the Asia-Pacific region, the Japanese yen and Australian dollar reflect diverging market dynamics. Despite gains by the euro and pound, the yen was the weakest G10 currency yesterday, holding above key support near JPY144.55 before dropping sharply to JPY143.75 today—an eight-day low. Support lies near JPY143.35 and JPY142.80. Japanese investors continue buying foreign bonds in large volumes, and key inflation and retail data are due tomorrow. Meanwhile, the Australian dollar has risen for three straight sessions, reaching as high as $0.6550. While short-term resistance is near $0.6600, stronger resistance lies around $0.6700, with strengthening technical momentum despite muted interest rate differential influence.
European Markets
The euro has surged past the $1.17 mark, reaching near $1.1745—its strongest level in three years. This marks a sharp break through its upper Bollinger Band. With little resistance until $1.19-$1.20, the euro is benefiting from narrowing US-German yield spreads, now at levels not seen since April.
The British pound is also gaining, having set a new three-year high above $1.3760. After dipping below $1.3600 earlier in the week, sterling has rebounded strongly, pushing past last week’s highs—a bullish technical signal. Speculation about a potential Shell-BP deal briefly supported sterling, though Shell has denied the reports. The euro-sterling cross remains stable in a narrow range.
American Markets
The US dollar index fell sharply for the second time this week, sliding below 97.00 in European trading—a new three-year low. There is little technical support until around the 95.00 level. Today’s US economic calendar is full, including a $44 billion auction of seven-year Treasury notes and May’s trade and durable goods reports. While aircraft orders likely boosted headline figures, core durable goods are expected to show a second monthly drop. Despite recent testimony from Fed Chair Powell, markets now price only a 15% chance of a July rate cut, with September looking more plausible.