SINGAPORE (Reuters) – The dollar (DX = F) took his breath on Thursday following a fierce bounce after President Donald Trump retreated from threats to fire Federal Reserve Chairman Jerome Powell.
After falling below 140 yen on Tuesday, the dollar rebounded from major chart support, lasting at 143.25 yen on Thursday.
It was further boosted when Treasury Secretary Scott Bescent said the US had not kept certain currency targets in mind ahead of talks with Japanese counterparts. Bessent also says the current de facto embargo on US-China trade is unsustainable, but warns the US will not move first when lowering taxes on Chinese products of more than 100%.
The dollar recovered from a three-and-a-half-year low of $1.1572 per euro, but sold a bit on Asian mornings, steady at around $1.1338.
When ing currency strategist Francesco Pesol in a note to clients, it is clear that other currencies are less sensitive to trade headings than the dollar.
“We believe that the balance of risk will remain distorted by the downside of USD anytime soon, but we don’t expect the repeat of the one-way traffic we’ve seen recently,” he said.
“That being said, EUR/USD remains almost entirely a function of USD’s movement, and if you’re afraid that the Fed’s independence will once again take a central stage, there’s another leg left over $1.15.”
The Australian and New Zealand dollars have similarly fallen from their recent peaks, but not so much.
Aussie was $0.6361 after a temporary violation of $0.64 this week, and Commonwealth Bank strategist Joe Capurso said it could test the 50-day moving average at $0.6286 due to continued concerns about global growth.
The New Zealand dollar was held at $0.5949.
Sterling and Swiss franc each stabilized after a sharp retreat, with Sterling at $1.3263 and Switzerland at 0.8290 per dollar.
The Chinese Yuan was stable at around 7.29 cases per dollar due to early trade.
(Reporting by Tom Westbrook.Editing Shri Navaratnam)
