Volatility & cautious optimism
The U.S. dollar is holding steady after recent volatility. Traders are now focused on the upcoming Consumer Price Index (CPI) release, which may influence expectations for future Federal Reserve monetary policy decisions. Recent employment data created mixed signals, keeping participants cautious.
The euro has gained modest support amid expectations that the European Central Bank may maintain a firmer stance on interest rates. The British pound is also supported by stronger-than-expected economic data from the UK, which boosted market confidence in GBP.
The Japanese yen remains under pressure due to ongoing monetary policy divergence. While intermittent intervention talk from Japanese officials provides temporary support, the persistent yield gap between the U.S. and Japan continues to weaken the yen.
Higher crude oil prices are giving strength to the Canadian dollar. As a commodity-linked currency, CAD is reacting positively to movements in energy markets, supported by recent supply developments and OPEC+ signals.