The dollar dropped on Friday as Trump threatened to escalate the trade war with fresh tariffs against China again. But as markets sense that he might back down from that, we are seeing risk trades bounce back modestly today and that includes the greenback as well. For many months now, the dollar has been hurt by Trump's policy incoherence and penchant for conflict. So, we're skipping the drama today and going straight to the TACO trade reversal.
USD/JPY is up 0.8% to 152.30 levels with EUR/USD down 0.3% to 1.1580 levels at the moment. The dollar is sitting mostly higher across the board, most notably only lower against the aussie. AUD/USD is up 0.7% to 0.6517 with the high earlier contesting its 100-day moving average of 0.6531. The aussie is mostly recovering on better risk sentiment after having fallen by over 1% on Friday.
Circling back to the dollar, the near-term charts continue to side with dollar buyers for the time being. And that's setting the tone to start the new week, even with it being a US holiday (Wall Street will be open for trade though).
USD/JPY is now nudging back above its own 100-hour moving average (red line), with buyers hoping to establish back a more bullish near-term bias. Hold above and that will invalidate the drop on Friday below the key near-term level. But keep below, and sellers will still be staying in the game to try and wrestle back some semblance of control in the early stages this week.
As for EUR/USD, we are continuing to see sellers keep price action pinned under its 100-hour moving average (red line) as well. That continues to reinforce a more bearish near-term bias for the pair for now.
