Given little else for the market to work with, we are seeing a more straightforward risk positive session with market participants also keeping the focus on the softer dollar from the end of last week. European equities are holding higher with S&P 500 futures now up 0.7% on the day.
That is seeing the dollar slip further in European morning trade, with EUR/USD now up 0.5% to 1.0140 and GBP/USD up 0.7% to 1.1930 currently. USD/JPY is also pushing back towards 138.00 and nearing a test of its 100-hour moving average:
As mentioned earlier, there is scope for a retracement in the dollar considering the shift in sentiment and the fact that near-term technical levels are switching around. As in the case for EUR/USD, buyers are now in near-term control – similar in GBP/USD, AUD/USD, NZD/USD, and USD/CAD (sellers). The technical change across the board suggests the recent dollar momentum has at least paused and we might see a bit of a pullback.
But with the FOMC meeting in focus next week, I doubt we will see too much weakness in the greenback with market players likely to fear the Fed pushing for a higher terminal rate. But for now, the debate between 75 bps and 100 bps – in which the former is winning – is helping to breathe some calm to start the new week.