US Dollar Rises Against Crosses on Demand for Safe Haven
The US dollar climbed to its highest level in about a month on surging demand for safe havens as concerns over war-driven inflation intensified.
Uncertainties about Middle East tensions, a series of failed peace attempts dragging global markets, and the dollar continuing to gain momentum. Global investors are increasingly betting on the dollar to win the Middle East war and scaling back on the European single currency, the Euro, as a result of significant exposure to higher oil prices fueling the energy crisis.
The EURUSD moved back below the 50% midpoint retracement of the rally from the March low, which comes in at 1.16287 as markets anticipate an inflation surge in the Euro area. The inability to hold above that key technical level gives sellers more control in the short term.
The GBPUSD moved back below the 61.8% retracement of the rally from the March 31 low, a key technical level at 1.33496. The break back below that retracement shifts the near-term bias more to the downside after buyers failed to sustain momentum above the level.
The USDJPY is held above a key swing area between 157.97 and 158.26, helping to keep the technical bias tilted to the upside. However, buyers remain somewhat cautious after failing to extend beyond the session high
The situation in the Middle East remains fragile and far from resolved, with Trump describing the first sentence of Iran’s latest proposal as “unacceptable”.
As a result, oil prices continued to climb, even as the Strait of Hormuz remained closed.
Meanwhile, a summit between President Trump and Chinese President Xi ended without any major agreements, including any indication that Beijing would help resolve the conflict.
Both the CPI and PPI reports released this week suggested that the energy shock is pushing US inflation higher.
Traders are now fully pricing in one rate hike by the Fed in March next year, with more than a 50% chance of a rate rise before the end of 2026.
The greenback strengthened across the board and the biggest gains were seen against the Aussie ad the pound. This week, the dollar is up nearly 1%. “Our Youth Do Not Need Handouts”, Elumelu Says at Africa Summit
