United States
The US dollar is trading with a modestly firmer bias against most currency counterparts today, supported by renewed geopolitical tensions in the Middle East that have tempered optimism around a potential extended ceasefire. Market participants are monitoring escalating hostilities, though such skirmishes remain relatively commonplace in the region. On Polymarket, the probability that the Strait of Hormuz opens by the end of June has been cut to approximately 45% from a peak of nearly 60% at the end of last week, reflecting the market’s reassessment of supply chain risks.
The greenback’s tone remains dependent on North American responses to unfolding geopolitical developments, which are expected to set the tone for the remainder of the trading session. The economic data calendar features several surveys today, including the Chicago Fed’s April national activity survey, the May Philadelphia Fed’s non-manufacturing survey, the Dallas Fed manufacturing survey, and the Conference Board’s consumer survey. Market participants appear more sensitive to the Conference Board’s survey release. Additionally, March house prices data will be released. US house prices rose during the second half of 2025 but have stabilized during the first two months of 2026, suggesting a moderation in the housing market’s momentum.
The 10-year US Treasury yield is down a little more than six basis points to slightly below 4.50%, reflecting the flight-to-safety bid that has emerged amid geopolitical uncertainty. Benchmark yields are firmer today after sharp declines yesterday, with the market reassessing the implications of Middle East escalation for Federal Reserve policy and economic growth prospects.
Eurozone
The euro was marked higher yesterday in early Asia-Pacific trading amid optimism over a potential US-Iran diplomatic resolution, finishing last week slightly above $1.1600 and not trading below $1.1620 during yesterday’s session. Despite subsequent reports of US-Iranian military clashes, the euro is trading quietly today while maintaining levels above yesterday’s low. Last week’s high was positioned a little north of $1.1660, with yesterday’s gains stalling in front of $1.1655. The single currency has returned to session highs near $1.1645 in subdued European turnover today.
Technical resistance remains formidable at recent highs. Options for 2.2 billion euros at $1.1650 expire today, which may influence intraday price action around that strike. A move above last week’s high would run into the next significant hurdle in the $1.1680–$1.1690 area, representing meaningful resistance for further euro appreciation. The technical setup suggests consolidation rather than a decisive directional break at present levels.
European benchmark yields have recovered from yesterday’s sharp declines, with yields mostly 2–4 basis points higher today. The 10-year JGB yield rose almost two basis points, and the Aussie 10-year yield is up three basis points. These moves reflect a partial reversal of yesterday’s risk-off positioning as markets digest the latest developments in the Middle East.
United Kingdom
Sterling demonstrated notable strength yesterday, poking above $1.3500 and reaching a seven-session high near $1.3510 before consolidating. The British pound frayed the 20-day moving average but settled below it near $1.3500 today. The 61.8% retracement of this month’s losses is positioned a little above $1.3520, and a move above that level could spur another half-cent gain in the near term. Cable is consolidating within yesterday’s range today and has found initial support around $1.3465.
The UK market was closed for the bank holiday yesterday, and Gilts are playing catch-up today with European markets. The 10-year yield is off almost four basis points as the market reprices expectations following yesterday’s global yield decline. This technical repositioning reflects the delayed reaction to the broader fixed-income selloff that occurred while UK markets were closed.
China
The US dollar’s broad setback saw it fall to a new three-year low against the offshore yuan yesterday of almost CNH6.78. Despite the sustained downtrend in the dollar against Chinese currency, the moves remain quite modest in magnitude. Notably, for the third time in six sessions the dollar has fallen by 0.20% or more, pointing to a small but measurable acceleration in the depreciation trend. The greenback is trading quietly today inside yesterday’s range, with the dollar’s low from early 2023 representing the next significant chart area near CNH6.6975.
The People’s Bank of China continues to signal its approval of yuan strength through official policy signals. The PBOC set the dollar’s reference rate at a new three-year low yesterday (CNY6.8318) and slightly lower again today (CNY6.8288), maintaining a consistent bias toward gradual currency appreciation. While the offshore yuan is nearly flat today, the PBOC’s consistent fixing behavior demonstrates official comfort with the current trajectory of currency revaluation. The technical setup suggests that a sustained break below CNH6.70 could accelerate the move toward the early-2023 lows.
Japan
The dollar peaked last week near JPY159.35, ending the week slightly below JPY159.20 and barely trading above JPY159 yesterday. The greenback is trading firm today against the yen and has reached almost JPY159.25, maintaining its recent range. It has held above yesterday’s low near JPY158.75, demonstrating resilience in the face of risk-off sentiment. Initial support is seen around JPY158.50–JPY158.60, and a break below that level could target the JPY158 area, representing a significant technical level for USD/JPY traders.
The 10-year JGB yield fell by almost 5.5 basis points yesterday amid the global risk-off move, reflecting the safe-haven demand for Japanese government debt. Yields are firmer today, with the 10-year JGB yield rising almost two basis points as markets stabilize. The Bank of Japan’s recent policy stance and the absence of immediate intervention signals suggest that the yen’s recent strength is being tolerated, though traders remain vigilant for any official comments that might signal intervention risk.
Canada
In the soft US dollar environment, the Canadian dollar has emerged as the laggard among G10 currencies. The loonie rose less than 0.1% against the greenback, the least among the major currency basket. By contrast, the Norwegian krone, which is more sensitive to oil price movements, rose more than twice as much, highlighting the divergence in performance. The US dollar stalled before the weekend near CAD1.3825 and held that level yesterday, with little selling pressure evident below CAD1.3800. Today the greenback is trading quietly between approximately CAD1.3800 and CAD1.3815.
Options for about $425 million at CAD1.3785 expire today, which may provide technical support around that strike. The market showed little reaction to the escalation of US-Canada trade tensions, as Canada hiked to 15% from 5% the amount of streaming services revenue that must go to local programming. This policy development appears to have been largely absorbed by markets without significant volatility in the currency pair, suggesting traders are focused on broader macroeconomic factors rather than specific trade policy adjustments.
Australia
The Australian dollar has broken out of its recent consolidation pattern. The series of inside trading sessions, which resembled a spring coiling for release, was challenged yesterday as the aussie reached $0.7175, a three-session high. The currency has been confined to about a fifth of a cent below yesterday’s high, maintaining the upside momentum. Last week’s high was closer to $0.7185, and the 20-day moving average is positioned a smidgeon above there, providing a technical benchmark for traders. A sustained move above the 20-day moving average could signal a continuation of the recent uptrend.
Australia reports April CPI tomorrow, which represents a key data point for the Reserve Bank of Australia’s policy outlook. Government support has pushed gasoline prices to pre-war levels, and the spike in gasoline prices added one percentage point to the headline rate. The pullback in April could unwind around half of that contribution. Additionally, the base effect may also make for a better comparison, as last April’s 0.7% increase drops from the 12-month measure. This data release will be closely watched for implications regarding RBA rate path expectations.
Emerging Markets
Risk-on sentiment and a larger-than-expected trade surplus helped lift the Mexican peso yesterday to its best level in six sessions. The dollar settled near MXN17.3380 at the end of last week and fell to MXN17.2440 yesterday, representing a meaningful appreciation of the peso. Today the greenback is consolidating between approximately MXN17.2725 and MXN17.3085, with nearby support seen around MXN17.20. Mexico reported April trade figures yesterday, with the $4.5 billion surplus considerably larger than any economist projection in Bloomberg’s survey. Through April, Mexico’s exports have risen by nearly 22% year-over-year, while imports are up almost 20%. These are nominal figures, reflecting a combination of price and volume changes. The central bank’s inflation report is due tomorrow and will provide important context for the currency outlook. Note that the first bilateral negotiating round to review the USMCA was held yesterday, adding another layer of complexity to the trade dynamics.
A combination of the short squeeze engineered by reports of heavy intervention last week and the pullback in oil prices helped extend the Indian rupee’s recovery. The dollar reached a two-week low of INR95.1150 and settled below the 20-day moving average yesterday for the first time since April 20. Indian equities rallied the most in six weeks yesterday, supporting the broader risk-on narrative for the rupee. However, today the rise in oil prices, a retreat in Indian stocks and bonds, and the pickup in crude oil costs saw the rupee pullback. The US dollar recovered and filled the gap created by yesterday’s lower opening. The greenback settled at the session high and last Friday’s low near INR95.6850.
India’s state-run gas stations lifted the price of gasoline and diesel for the fourth time in 10 days yesterday. The latest move brings the cumulative increase to 7.8% for gasoline and 8.6% for diesel, with prices now at four-year highs. This sharp increase in energy costs could have implications for inflation expectations and the Reserve Bank of India’s policy trajectory going forward.
Global Markets
Asia-Pacific equities advanced for the third consecutive session yesterday, marking the longest rally in more than a month. However, profit-taking saw most bourses in the region slip today, with notable exceptions including South Korea’s Kospi, which surged 2.55%, and China’s CSI 300, which gained approximately 0.55%. Europe’s Stoxx 600 has enjoyed a six-day rally, the longest advance in a year, but that rally is being threatened today. The index is off about 0.3% ahead of the open of the North American session. US index futures are firm, trading approximately 0.50%–1.0% higher, suggesting a positive open for American equities.
Benchmark 10-year yields dropped sharply yesterday in a broad flight-to-safety move. The 10-year JGB yield fell by almost 5.5 basis points, the yield in the Antipodeans fell 4–5 basis points, and European benchmark yields fell 10–12 basis points. Yields are firmer today as markets stabilize. The 10-year JGB yield rose almost two basis points, and the Aussie 10-year yield is up three basis points. European yields are mostly 2–4 basis points higher today. The UK market was closed for the bank holiday yesterday and the Gilts are playing catch-up today. The 10-year yield is off almost four basis points, while the 10-year US Treasury yield is down a little more than six basis points to slightly below 4.50%.
Gold traded higher with risk-assets yesterday and briefly saw $4,580, a four-day high. However, it has come back lower today, having been sold to almost $4,512 before stabilizing in the European morning. Silver briefly traded above $78.80 yesterday but could not get above $78.50 today and retreated to almost $75.65 in European turnover, suggesting a modest risk-off repositioning in precious metals.
Crude oil markets remain volatile amid Middle East tensions. August Brent crude oil is paring yesterday’s nearly 6.8% drop but is still holding mostly below $97 a barrel. July WTI is a little below $92 after settling last week near $96.60. July WTI gapped lower yesterday and fell to almost $89.40 before steadying. The gap from last Friday’s low near $94.75 to yesterday’s high near $93.90 is important from a technical perspective. The risk of escalation in the Middle East war sent the contract to about $93.65 in Europe today. Outside of Middle East geopolitical developments, the news stream has been light, and the North American market response to these events will likely set the tone for the remainder of the trading session.
The Reserve Bank of New Zealand meets first thing tomorrow and is expected to keep its target rate at 2.25%, providing another data point for the broader global monetary policy landscape.
