US dollar holds onto overnight gains

The US dollar remained well-bid overnight, with losses versus the euro offset by gains versus Asian and Commonwealth currencies. The rise in US yields, and haven flows, continue to be supportive of the greenback, as do commodity prices, most of which are priced in US dollars. That left the dollar index trading sideways, easing 0.16% to 99.08, edging lower to 99.05 in Asia. Only a fall through 98.50 would change the underlying bullish US dollar outlook.

Euro rises as Europe refuses to follow US energy ban

EUR/USD staged a relief rally overnight, as Europe declined to follow the US energy sanction lead, and European gas prices eased. It rallied 0.37% to 1.0895, rising to 1.0910 in Asia. Once again, sentiment remains fragile and although it remains oversold on a technical basis, the 1.1000 region will be challenging resistance. The UK did follow US sanctions to a certain extent, capping GBP/USD overnight. It was unchanged at 1.3110, where it remains in Asia, with resistance at 1.3150. USD/JPY has risen to 115.85, thanks to higher US yields overnight.

The AUD and NZD fell once again overnight, as tensions in the commodity space temporarily eased, nickel aside. AUD/USD finished 0.60% lower at 0.7270, closing below support at 0.7300. NZD/USD fell 0.30% to 0.6805, just above support at 0.6800. Having booked strong gains over the past weeks as commodities rallied, the antipodeans remain more vulnerable to risk-aversion flows now.

The onshore and offshore Chinese yuan’s fixing is almost unchanged over the last 24 hours, trading at 6.3170 and 6.3220 respectively in Asia.  USD/Yuan remains anchored below 6.3300, with haven inflows capping any yuan weakness. Given the move higher in commodities, authorities are probably content to leave yuan strength untouched. Elsewhere, regional Asian currencies traded mostly sideways overnight, as the US dollar consolidated its gains.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.