Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD lower ahead of corporate earnings deluge
The US dollar was lower on Monday with markets on edge ahead of the busiest week of corporate earnings from US companies. The Australian dollar gained strongly.
More than a third of the S&P 500 will report this week including four of the so-called “Magnificent Seven” – Microsoft, Meta, Amazon and Apple.
Financial markets will not be necessarily focused on the results. Instead, the company forecasts, including the likely impact of tariffs, will be key.
The US dollar weakened ahead of the results with the biggest gains seen in GBP/USD, up 0.9%.
The AUD/USD climbed 0.5% as the pair returned to four-month highs. The NZD/USD gained 0.2%. The USD/SGD fell 0.5% while USD/CNH lost 0.2%.
ECB’s Kazaks warns against rate cuts
According to Bloomberg, Martins Kazaks, a member of the Governing Council, stated that the ECB should only cut rates to an “accommodation” level if the economic outlook significantly worsens.
Kazaks stated over the weekend in Washington, where he attended the IMF’s spring meetings, that while US tariff policies may slow down inflation and even trigger a recession, there is little indication of what will happen next and reducing too much would waste policy space.
“The question is more about whether we will have to go much lower below 2.00%, but we are at 2.25%,” he stated. “If it’s necessary, we’ll do it, but in order to do so and further reduce inflation, the state of the economy would need to deteriorate.”
EUR/USD has recently corrected from short-term highs. From here, the 21-day EMA support of 1.1219 will be crucial for EUR/USD.
In EUR/SGD, 21-day EMA support of 1.4827 will be key support for EUR/SGD.
AUD/EUR next key resistance is its 21-day EMA of 0.5640, and 50-day EMA of 0.5746 next.
US made no reference to FX levels, USD/JPY to rise?
According to Atsushi Mimura, Japan’s vice finance minister for international affairs, the US made no reference to FX levels during the bilateral meeting in Washington.
“As we have said, the U.S. side did not touch upon exchange-rate targets in the finance minister talks.”
Looking at the chart, there’s a stark dichotomy between the USD/JPY and the US 10-year bond yield.
USD/JPY is climbing back up to its key 21-day EMA of 144.51, and the next key resistance will be 50-day EMA of 147.12, where USD buyers may look take advantage now.
Aussie back near four-month highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 29 April – 3 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.
