As for the US dollar, the prospects of a quick resolution of the US government debt crisis have diminished its safe-haven appeal. On the other hand, the growing expectations of interest rate hikes by the Fed are supporting the greenback against its counterparts in the G6 basket.

As a result, the US dollar index climbed to 104.5 on Tuesday, the highest level in ten weeks. Against the backdrop of uncertainty and a looming US default, the greenback remains resilient.

On Tuesday, the US currency was moving in the green price corridor of 104.09 - 104.51 in the Asian session. The greenback is expected to rise by 2.5% in a month. That will certainly confirm its status as the almighty currency even against the background of the recent sell-offs.

In the short term, the greenback is likely to remain bullish. Breaking above 104.5, USDX will reflect an intensification of buying activity. This may accelerate the uptrend to the resistance levels of 104.7 and 105.5.

Today, the US dollar fell sharply against the Japanese currency almost to 140, as the bearish momentum intensified. The pair's chart has already shown high volatility in the Asian session, as we warned at the beginning of our review.

In addition, long positions in the pair reduced as the dollar index became less attractive. US Treasury yields also fell sharply. As a result, the yield-sensitive yen received some optimism.

Investors received positive signs from the Bank of Japan after Governor Kazuo Ueda announced that the regulator planned to buy government bonds. The governor stressed that the Bank of Japan would patiently maintain its ultra-loose monetary policy as there was some distance to sustainably achieving its 2% inflation target.

Today, the yen will be driven by news from the US - the debt ceiling negotiations and economic data. In the Asian trade, the yen started the trading session in the range of 139.9-140.9 against the US dollar. At the same time, the Japanese currency is expected to strengthen.

The antipode currencies also saw high volatility today. At the beginning of the Asian session, the Australian dollar sharply strengthened to 0.6550 on sell-offs of the greenback and a possible surge in domestic inflation.

However, the aussie was then pulled sharply lower and settled in the range of 0.6503-0.6560. Meanwhile, the Australian currency may receive support from the CPI release on Wednesday. In addition, inflation in Australia is expected to rise slightly.

Tomorrow, investors will also focus on a speech by the head of the Reserve Bank of Australia, who will present his rate forecasts. On the other hand, expectations of further interest rate hikes by the Fed are strengthening the greenback against the Australian dollar, restraining the pair’s rally slightly above 0.6540.

The New Zealand dollar is trading within the range of 0.6027-0.6063 today. The currency started a consolidation at the end of the Asian session and traded in the area of 0.6050.

Notably, the kiwi is falling against most of the major currencies. Against the US dollar, it remains at its lowest level in the last six months. Since New Zealand’s economic activity is slowing down and the country's central bank may refrain from interest rate hikes, the bearish sentiment is likely to persist.


00:00 Intro
00:29 US
01:14 USDX
02:40 USD/JPY
03:56 AUD/USD
05:02 NZD/USD

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