USD Reverses Early Drop as Euro Falls From Highest Since 2015

The dollar reversed earlier losses, supported by a steady climb in Treasury yields. The euro retreated from the highest since 2015 after the International Monetary Fund urged the European Central Bank to be cautious about removing stimulus.

The Bloomberg Dollar Spot index recouped losses of as much as 0.2 percent to gain about 0.2 percent, in line with an advance by Treasury yields. Meanwhile, the euro pulled back after climbing above 1.1700 for the first time since August 2015. Markets now turn to the Federal Reserve decision due Wednesday.

The FOMC’s statement on Wednesday will probably say that policy makers are ready to begin normalizing the central bank’s balance sheet relatively soon, which should solidify expectations for an announcement in September. There is no press conference scheduled for after the meeting

EUR/USD is trading with a gain of less than 0.1% at ~1.1649 after earlier rising as high as 1.1712, stalling at technical resistance from the 1.1714 peak seen on Aug. 24, 2015. The euro retreat came shortly after an IMF report urged the ECB to maintain its stimulus program, echoing past ECB concerns of downside risks to growth

EUR ran into strong selling around its high; more than EU1b of offers were visible in the 1.1700/05 zone before EUR reached its peak, a trader in Toronto said, while another described profit-taking from fast-money accounts as the pair extended its retreat below 1.1700 GBP/USD is trading ~1.3036 after earlier rising to a fresh high for the day at 1.3084 as morning dollar losses broadened.

GBP saw buying from a model-driven fund as it broke above 1.3050, adding momentum to the pair, according to a trader in London familiar with the transactions who asked not to be identified because not authorized to speak publicly. GBP may face technical resistance at the July 18 high 1.3126 USD/JPY trading ~111.87 vs fresh session high of 111.93, vaulting its 100-DMA at 111.67 and testing the 55-DMA of 111.83. JPY lost ground vs all of its G-10 peers after BOJ minutes showed that new policy board members agree the central bank is far from removing its policy accommodation. The USD/JPY gain was supported by a rise in U.S. stocks that came after a round of positive earnings reports, notably from Caterpillar, that underpinned some risk currencies such as AUD

(sourced from bloomberg)

• 
  

•