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[MARKET ANALYSIS] DXY weaker on geopolitical optimism, Antipodeans gain, JPY bid on potential intervention

The DXY's weakness this morning is largely driven by optimism over potential US-Iran negotiations, fostering a risk-on sentiment that benefits major currencies, particularly the Antipodeans and JPY.

Newsquawk StaffPublished On the live feed at — 6 more headlines followed before this page went public
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[MARKET ANALYSIS] DXY weaker on geopolitical optimism, Antipodeans gain, JPY bid on potential intervention

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  • Snapshot: G10s are stronger against the USD this morning, to varying degrees; the Antipodeans outperform, given the risk tone; JPY is also towards the top of the pile, following potential intervention overnight. SEK is a touch weaker vs EUR this morning after a cooler-than-expected inflation report, but will unlikely shift the dial for the Riksbank on Thursday.
  • DXY is weaker this morning, and currently trades within a 97.89 to 98.34 range. Pressure facilitated by the risk-on mood, amidst optimism surrounding progress towards US-Iran peace. Potential JPY intervention also facilitating the pressure this morning (discussed below). This stems from a post from the POTUS, who announced that the US would pause Project Freedom to allow time for negotiations to occur. Other sentiment boosters in early European hours have included a post via Pakistani journalist Mallick, who suggest he would not be surprised to see an Iranian proposal to the US, “soon”. Separately, Iranian FM Araghchi said he held talks with his Saudi counterpart where they discussed preventing escalations in the region.
  • Domestically, focus will be on ADP employment change (exp. 118K, prev. 62K) comes ahead of this week’s NFP on Friday; weekly MBA mortgage applications. Fed speak today includes, Goolsbee and Musalem.
  • Focus overnight was on USD/JPY, where an aggressive move lower took the pair to a 155.00 handle, before bouncing back towards 156.00. There is currently no confirmation that the move was intervention, but markets should begin to get some details on recent moves late in the Japanese session. Time will tell whether these attempts of intervention proves effective, given the volatile nature of the Middle Eastern conflict. A near-term resolution will help the USD/JPY trundle lower, a factor which Japanese Officials would probably require to achieve any lasting strength in the JPY.
Context

The mention of possible intervention regarding the JPY suggests volatility may remain high, and any tangible progress in geopolitical discussions could further shape currency movements. Traders should closely monitor the developments around these talks and how they might influence the market's risk appetite and currency positioning.

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