Market Update on US Dollar and Economic Data

The US dollar is experiencing a dip against leading currencies. Traders are particularly focused today on the FOMC’s upcoming rate announcement, which should provide insights into future policy changes. One question on everyone’s mind is: how low will the dollar go?

EURUSD: Early in the Asian session, sellers made their appearance, but buyers quickly stepped in around 1.1273, an important support level on the daily chart. This repeated defense has pushed the pair higher; however, profits have hit a wall around the 200-hour moving average, which sits at 1.13469. This moving average has historically led to reversals over the last couple of days. Today, sellers seem more wary. Staying above the 200-hour moving average could tilt the technical analysis toward a more positive outlook.

USDJPY: Last Friday, USDJPY tested its 200-bar moving average on the 4-hour chart. In today’s trading, prices initially fell below the 200-hour moving average, only to find temporary support at the 100-bar moving average near 142.86. However, as the US session progresses, sellers are pushing prices down further. If the price dips below the 100-bar moving average, we may see a target around the 141.64–142.11 area. Conversely, if prices hold steady, a rebound towards the 200-hour moving average at 143.49 is possible.

GBPUSD: GBPUSD is experiencing a rise today after crossing above the 100-hour moving average at 1.3302 and then the 200-hour moving average at 1.3326. This bullish momentum has led the pair into a crucial resistance zone between 1.3362 and 1.3378. Currently, trading is occurring within this swing area, and breaking above could pave the way to reach the year’s extremes between 1.3378 and 1.3441. This resistance zone is critical as the US session kicks off.

In Germany, political uncertainty looms as Prime Minister Mertz’s first parliamentary vote fell short with 310 votes against the required 316. A second vote is set for 2:00 PM BST.

Meanwhile, in North America, trade data for March is on tap. The US is expected to show a notable trade deficit of $1370 billion, increasing from $122.7 billion in February. Canada’s deficit is also projected to widen slightly to $1.56 billion from $1.52 billion previously.

At 10am ET, Canada released its IVEY PMI, with previous figures adjusted to 51.3. All eyes are on this index, though it often doesn’t spark major market reactions.

Additionally, at 1pm ET, the US Treasury will auction a 10-year memo. The auction for three-year memos yesterday indicated strong demand, particularly from domestic investors.

On the FX sentiment front, a Reuters poll has raised questions about the US dollar’s reputation as a safe haven. Among 83 strategists surveyed, 46 expressed concerns, a jump from 19 out of 51 in the earlier survey.

Looking at other developments, major US stock indices are trending downward according to futures:

• Dow Jones Industrial Average – down 257 points
• S&P Index – down 43 points
• NASDAQ Index – down 205 points

Yesterday, the S&P ended its nine-day winning streak by dropping 36.29 points, or -0.64%, while the NASDAQ index declined by -0.74%.

As for the US debt market, yields are showing a mixed bag ahead of the 10-year auction at 1pm:

• 2-year yield: 3.807%, down 3.4 basis points
• 5-year yield: 3.928%, down 1.4 basis points
• 10-year yield: 4.341%, down 0.2 basis points
• 30-year yield: 4.840%, up 1.2 basis points