Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Dollar finds support ahead of tech earnings
The dollar steadied after recent weakness, with the DXY index unable to break above 100.00 overnight despite mixed flows during the New York session.
US equity futures found initial support on Nvidia’s Q1 earnings, though gains faded as markets awaited CEO commentary scheduled this Friday.
Tech-correlated Asian FX expected to track semiconductor sector sentiment, with chip and AI-related headlines remaining key drivers.
USD/JPY currently above key psychological handle of 145.00.
USD/CNH and USD/SGD were both flat overnight.
NZD/USD gains 0.3% post RBNZ rate decision, while AUD/USD down 0.26% overnight.
FOMC flags inflation fears
The latest FOMC minutes reveal concerns about rising inflation risks, a weakening labor market, and potential shifts in the USD’s safe-haven status.
Inflation concerns stem from tariffs, with many participants noting firms are likely to pass on costs to consumers, potentially causing persistent price increases.
While long-term inflation expectations remain anchored, risks of upward shifts were highlighted.
On the labor market, uncertainty looms, with participants warning of potential weakening tied to trade and government policies.
Finally, an unusual shift in asset price correlations raised concerns about the dollar’s waning safe-haven appeal and its broader economic implications.
Looking at APAC FX, USD/SGD was flat overnight, but has rebounded recently.
Next key resistance level for the pair is at 21-day EMA of 1.2964 and 50-day EMA of 1.3092, where USD buyers may look to take advantage.
Fed’s Williams warns of inflation expectations and is hawkish
Williams, the president of the New York Fed, stated that it was critical to have a strong anchor for inflation expectations.
He stated that in order to prevent inflation from becoming permanent, the Fed must prevent it from being persistent.
According to Williams, the Fed had to act decisively when inflation started to stray from its target in order to do that.
He added, the Fed must keep an eye on the entire inflation curve; while short-term expectations may diverge, the curve must demonstrate that they will eventually return to normal.
From technical lens, looking at Antipodeans post RBNZ rate decision, AUD/USD is trading near mid of 30-day trading range while NZD/USD is above the 30-day trading range.
AUD/USD currently sits at 21-day EMA of 0.6424 support, whereas NZD/USD slightly above 21-day EMA support of 0.5932.
Kiwi tick up post RBNZ rate decision
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 26 – 30 May
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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