United States
The US Dollar Index has extended its losing streak to eight consecutive sessions, matching the longest downdraft since April 2011. The greenback is trading firmer against most G10 and emerging market currencies today, suggesting the streak may finally snap if gains are sustained through the session. Despite headwinds from stronger-than-expected international economic data, the dollar has shown resilience in early North American trading, though the technical picture remains fragile after such a prolonged decline.
On the economic calendar, the US reports March industrial production figures today, with both industrial output and manufacturing production expected to post modest gains of 0.1%. If this forecast proves accurate, it would cap the strongest quarterly rise in industrial output in three years—a silver lining amid broader growth concerns. However, the Atlanta Fed’s GDP tracker continues to anticipate a second consecutive quarter below the median Federal Reserve view of trend growth at 2%, up from 1.8% in December 2025. Additional data releases today include the New York Federal Reserve’s April services survey and the Philadelphia Federal Reserve’s business outlook. The US economy has demonstrated a concerning decline in consumer sentiment and small business optimism in recent weeks, adding pressure to the growth narrative. Weekly initial jobless claims are also due, with the four-week moving average having risen once since early February—specifically the week ending April 3—suggesting labor market momentum may be moderating.
The political backdrop remains unsettled, with President Trump indicating that the investigation into the Federal Reserve will continue. He has accepted that this could delay the confirmation of Kevin Warsh to succeed Jerome Powell as Fed chair. The timeline for completing Warsh’s confirmation before Powell’s term expires as chair remains unclear, though the president’s earlier threat to fire Powell has been noted but apparently ignored by markets. This political uncertainty adds another layer of complexity to near-term policy expectations.
Treasury yields have softened modestly, with the 10-year yield trading around 4.27%, down approximately one basis point on the day. The broader yield curve reflects uncertainty about the Fed’s near-term path, particularly given the mixed signals from growth data and labor market indicators.
Eurozone
The euro demonstrated resilience yesterday, refusing to trade below the $1.1770 level and spending much of the North American afternoon straddling the $1.1800 area. The single currency reached almost $1.1825 during the session, a level corresponding to the 61.8% Fibonacci retracement target of the euro’s decline since the January high near $1.2080. However, this advance was met with significant selling pressure, which pushed the currency back toward $1.1770. Initial support for the euro is established near yesterday’s low, with a secondary support level identified at $1.1755.
The eurozone’s economic data continues to provide mixed signals. While the stronger-than-expected GDP figures from the broader region offer some support to sentiment, the ECB’s policy stance remains accommodative relative to other major central banks. The technical picture for EUR/USD suggests consolidation is likely in the near term, with traders watching for a break above the $1.1825 resistance level or a decisive move below the $1.1755 support to establish a new directional bias. The 20-day moving average continues to act as an intermediate reference point for longer-term trend traders.
United Kingdom
Sterling demonstrated notable strength following the release of better-than-expected UK economic data, though the currency has since given back some of those gains. Cable was confined to approximately one-third of a cent below $1.3580 yesterday, settling little changed on the day amid relatively uneventful turnover. Monday’s high was recorded near $1.3590, slightly below the 61.8% Fibonacci retracement of sterling’s decline since the late January high around $1.3870. The currency reached a new two-month high today following the stronger-than-expected February GDP reading of 0.5%, but has since reversed lower and been sold through yesterday’s low near $1.3545.
The UK economic data proved more resilient than anticipated. The economy expanded by 0.5% in February after unexpectedly stagnating in January. Industrial output and services activity both improved sequentially, each rising by 0.5%, while construction surged by 1%. However, the trade picture deteriorated, with the trade deficit widening. Notably, when excluding precious metals trading, the trade balance returned to deficit at GBP2.3 billion after January saw the first surplus since the end of 2024. This deterioration in the external account may weigh on sterling over the medium term.
Initial support for cable is identified in the $1.3500-$1.3525 area, with options for approximately GBP307 million at the $1.3520 strike expiring today. This option expiry represents a potential technical pivot point and may influence intraday price action. Traders should monitor the $1.3520 level closely for any gamma effects as expiration approaches.
China
The offshore yuan snapped an eight-session advance against the dollar yesterday, ending what had been the longest rally since February 2020. The currency is trading with a slightly softer bias today, and the dollar has pushed back above the CNH6.82 level. Nearby resistance is identified around CNH6.84, suggesting consolidation may be underway after the extended rally.
China’s economic data released this week presented a mixed picture. First-quarter 2026 growth came in at 5.0%, slightly better than expected, providing some reassurance about the world’s second-largest economy. However, beneath the headline figure, significant weaknesses emerged. Industrial output rose a respectable 5.7% year-over-year, but retail sales disappointed significantly, rising only 1.7%. Fixed asset investment ticked lower, and the surveyed unemployment rate edged up to 5.4% from 5.3%, suggesting labor market softness. Most concerning is the continued deterioration in the property sector, with both new and used house prices continuing to decline as the real estate market remains distressed.
The People’s Bank of China lifted the dollar’s reference rate today for the first time this week. The fix was set at CNY6.8616, compared to CNY6.8582 yesterday. Notably, the reference rate has been set at three-year lows for the past two sessions, indicating the PBOC’s preference for a firmer yuan amid external pressures and the need to support domestic asset values. This policy stance reflects the central bank’s balancing act between supporting growth and maintaining currency stability.
Japan
The dollar held above Monday’s low near JPY158.60 against the yen yesterday but stalled in front of the 20-day moving average, which was found slightly below JPY159.20. The greenback was initially sold to a six-day low near JPY158.25, seemingly encouraged by an implied threat from Japan’s Finance Minister Katayama. Following her meeting with US Treasury Secretary Bessent, Katayama stated that officials were prepared to take “bold action” to support the yen, raising the specter of potential intervention. However, the dollar has recovered to push slightly above JPY159 in European turnover, suggesting the market has largely discounted the intervention rhetoric for now.
The USD/JPY pair has remained largely confined within a JPY158-JPY160 range through the middle of the month, with only one minor violation of these boundaries. This range-bound behavior reflects the ongoing tension between US dollar strength globally and Japanese authorities’ desire to prevent excessive yen weakness. The threat of “bold action” from Tokyo remains a key risk factor for dollar-yen traders, as any actual intervention could trigger a sharp reversal from current levels.
The 10-year Japanese Government Bond yield eased by one basis point to 2.39%, reflecting the broader softening in global yields and possibly some defensive positioning ahead of potential BOJ policy developments. Japanese economic data and any further commentary from BOJ officials regarding monetary policy normalization will be critical in determining the near-term direction of the currency pair.
Canada
The Canadian dollar remained firm yesterday and finished strongly, demonstrating resilience amid broader dollar weakness. The US dollar held slightly below Monday’s high near CAD1.3795 in early North American dealings but trended lower throughout most of the session. The greenback took out Monday’s low near CAD1.3730 in the New York afternoon, slipping below CAD1.3715 to reach its lowest level since March 23. The loonie has steadied in the European morning and moved back into yesterday’s range, with the CAD1.3740-CAD1.3760 area offering the initial hurdle for the dollar’s recovery.
Canada reports March existing home sales today, and the data is expected to reflect continued weakness in the residential real estate market. Home sales have fallen in the previous four months and five of the last six, indicating a prolonged softening in housing activity. This weakness reflects the cumulative impact of higher interest rates and reduced affordability, which has dampened housing demand across the country. The Bank of Canada’s policy stance will remain crucial in determining whether the housing market stabilizes or continues to deteriorate.
Australia
The Australian dollar reached almost $0.7180 yesterday and extended gains to almost $0.7200 today, reaching its best level since mid-2022. The upward momentum was not sustained, however, and the aussie has slipped through its closing levels and is slightly lower on the day. Nearby support is identified around $0.7150, with a secondary support level at $0.7125. The extended rally in AUD/USD reflects positive sentiment surrounding the Australian jobs report and broader risk appetite in global markets.
Australia’s labor market demonstrated strength in March, with the economy growing approximately 18,000 jobs while the unemployment rate remained steady at 4.3%. More impressively, full-time positions grew by 52,500 after having lost a revised 27,700 in February (initially reported as -30,500). This strong full-time employment growth contrasts with the modest headline number and suggests underlying labor market resilience.
However, officials at the Reserve Bank of Australia have struck a cautious tone. The deputy governor warned that inflation remains too high and acknowledged that officials are not “highly” confident that the current rate setting is sufficient, especially given new shocks emanating from Middle East tensions. The futures market is currently discounting approximately a 72% probability of a rate hike at the early May meeting, reflecting expectations that the RBA may need to tighten policy further despite the strong employment data. This hawkish positioning from the RBA has provided support to the Australian dollar despite broader dollar strength.
Emerging Markets
The Mexican peso traded quietly yesterday, with stretched momentum indicators warning of the likelihood of some near-term consolidation. Despite the quiet trading, the peso remains the fourth-strongest emerging market currency this month, with a nearly 4% gain year-to-date. The greenback forged a base around MXN17.10 in January and February, before the geopolitical tensions began. The dollar settled near MXN17.2270 before the conflict escalated and briefly slipped below MXN17.20 on Monday. The greenback held above MXN17.24 yesterday and initially fell slightly below MXN17.22 today before rebounding above MXN17.28. The MXN17.30-MXN17.32 range may offer initial resistance for the dollar’s recovery.
The Indian rupee is trading quietly and slightly firmer today. The US dollar is trading inside yesterday’s range, oscillating between approximately INR93.1335 and INR93.3575. India’s trade data released this week showed mixed results. The March trade deficit narrowed, but this reflected weakness on both sides of the ledger. Exports fell 7.4% year-over-year in March, a sharp deterioration from the 0.8% decline in February, while imports tumbled 6.5% compared to a surge of 24.1% in February. Additionally, India reported that its March unemployment rate rose to 5.1% from 4.9%, suggesting some softening in the labor market. These economic indicators may eventually pressure the rupee if the trend continues, though near-term trading has remained subdued.
Global Markets
Risk appetite has remained intact despite the complex geopolitical backdrop. The US S&P 500 and Nasdaq equity indices reached record highs yesterday, and this positive sentiment spilled over into the Asia Pacific region. Most of the large bourses gained at least 1%, with the Nikkei’s nearly 2.4% gain sufficient to lift it to a record high, following the US indices higher. The Nikkei’s strong performance reflects both the positive global sentiment and the weakness in the yen, which benefits Japanese exporters. Europe’s Stoxx 600 has been alternating daily between gains and losses for nearly two weeks, with yesterday being a down day, suggesting today should see gains if the pattern holds. US index futures are trading firmly, indicating that the positive momentum may continue into the US cash session.
A possible two-week extension in the US-Iran ceasefire may have helped overall market sentiment. However, with the blockade of Iranian ports remaining in place, some projections show that storage capacity would be exhausted within two weeks. The two-week extension would add significant pressure on Tehran and may constrain oil markets if the blockade is maintained.
Benchmark 10-year yields are mostly lower across the developed world. The 10-year Japanese Government Bond yield eased one basis point to 2.39%, while European yields are mostly 2-3 basis points lower. The 10-year US Treasury yield is around one basis point softer, trading near 4.27%. This broad softening in long-dated yields reflects some flight-to-quality flows and uncertainty about the near-term growth trajectory.
Precious metals are trading firmly within recent ranges. Gold reached $4,871 yesterday, its best level in nearly a month, and continues to trade firmly. Silver is also performing well, straddling the $80 level, benefiting from the broader risk-off sentiment and expectations of extended monetary accommodation. The precious metals complex remains well-supported by expectations of lower real rates and geopolitical uncertainty.
Energy markets have stabilized after recent volatility. May West Texas Intermediate crude oil dropped slightly below $87 yesterday but settled above $90, a level it is holding above today. Yesterday’s high was near $93.30, while today’s high has reached $93.00. A push above the $93 resistance level could target $95, representing a significant technical breakout. The recent volatility in crude reflects both supply concerns related to Middle East tensions and demand considerations as global growth remains uncertain.
Note: Daily commentary will resume following a business trip. Weekly analysis will be posted on April 18, and the May monthly note will be published on April 25. Thank you for your patience and best of luck in your trading.
