Dollar stays on the backfoot in European morning trade

The dollar is down today, giving back some of the gains from yesterday as broader markets are seeing a bit more of a calmer mood for now. US futures are up while the bond market is also keeping steadier so far on the day. That is seeing the dollar ease back from the gains yesterday with EUR/USD up 0.3% to 1.0943 while USD/JPY is down 0.5% to near 147.00 again on the day.

The latter is starting to nudge back below its 100-hour moving average (red line), which will allow sellers to regain near-term control. But at this point, headline risks are still the main driver more so than the technicals. But amid a quieter period for now, this is the only thing to watch out for before we get to US trading.

In the bigger picture though, the 145.00 mark remains the key downside level to watch for USD/JPY in the more immediate term.

Elsewhere, GBP/USD is also up 0.3% to 1.2753 but it’s not much of a recovery after a fall from a high of 1.3200 last week. Meanwhile, we do have AUD/USD up over 1% to 0.6055 but that also comes amid a plunge from 0.6300 since Friday.

There’s less than 20 hours now before Trump’s tariffs deadline. So, it’s all about watching out for any signs of wiggle room or if trade tensions are going to escalate further in the days ahead.

In the meantime, we might have moved on from peak fear in markets and avoided more panic selling yesterday. But is that really a green light to be buying into the hopeful optimism today? Not quite perhaps but we’ll see.

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