Dollar firms as traders check back on tariffs

The dollar fell yesterday as traders were hopeful that Trump may not come down hard on the tariffs front. His inauguration speech and first orders were not too forceful on the issue but late on in the day, he delivered a warning here. It’s a check back to reality for markets that things are not going to be so straightforward when it comes to Trump. That is keeping the dollar firmer today with EUR/USD now falling to a low of 1.0350:

The pair has been fairly volatile in a smallish range since the leap higher from 1.0320 to 1.0400 yesterday. Large option expiries are also in play today, so do keep that in mind.

But from a technical standpoint, buyers are still in near-term control. However, it’s not all too convincing if broader markets also get a check back that tariffs will ignite trade tensions to begin Trump’s term.

The bond market is still on the fence though with yields having declined since last week. 10-year Treasury yields are still down 4 bps at the balance now but are up from 4.53% earlier in the day to 4.57% currently.

Looking elsewhere, USD/JPY is also seen up 0.1% to 155.70 now while GBP/USD is down 0.6% to 1.2250 on the day. USD/CAD is also marked higher by 0.8% to 1.4430 but well off earlier highs of 1.4515 at least.

Despite equities keeping firmer, the antipodeans are sitting lower on the day with AUD/USD down 0.6% to 0.6235 at the moment.

This article was written by Justin Low at www.forexlive.com.