Currencies shift as dollar weakens
The US dollar continues to come under heavy selling pressure. The USDJPY broke below 148.50, a key level that traders have been watching closely. The pair is now trading at levels last seen in early October last year as the dollar recovered after the unwinding of the yen carry-trade.
Sterling was a touch weaker against the dollar this morning, having charged above 1.2800 during a strong rally yesterday. The euro has also surged in price against the dollar since the beginning of this week and is now testing resistance around 1.08, despite expectations of a 25-basis point rate cut from the ECB later today.
While the move has been well-telegraphed, traders will closely watch the accompanying press conference for any signals on future monetary policy direction. Any hints that this could be the final cut in the current cycle could give the euro additional support. But it’s the US dollar which is the focus for now, as investors worry about the effect of tariffs on the outlook for US economic growth.