US FX WRAP: Dollar rally marches on in risk-off trade

The dollar was bid in today's risk-off trade, which saw tech-heavy equity indices hit, with the Nasdaq-100 down over 3% and KOSPI down 10%. The move lower across equity markets had no one headline behind it, though excessive levels of leverage trading and the popularity of A-related instruments have seen volatile moves increase.  Outside of the equities pressure, newsflow throughout the day sparked little reaction in currency pairs. US data was mixed, S&P Global Flash PMIs beat Services 51.3 (exp. 51, prev. 50.7) and Manufacturing 55.7 (exp. 54.7, prev. 55.1); meanwhile, Richmond Fed saw Manufacturing drop to 4 from 13 (exp. 9). DXY climbed to 101.42 with the 101.98 high seen in May 2025 coming into view.

In Europe, Flash PMIs were mixed. The French Composite was better-than-expected, supported by services and manufacturing. EZ svs and mfg beat. EUR saw strength on the firm French headline PMI figure, with commentary indicating a cooling of cost pressures. However, the move proved short-lived as later Germany's readings missed, weighed down by a contraction in services. EUR/USD broke below the March 2026 low of 1.1411 to around 1.13780

Antipodes were the worst performers on Tuesday, given their high-beta nature in a risk-averse environment. Meanwhile, JPY saw relative outperformance, helped by a sharp move lower in USD/JPY in early London trade (absent a headline), with Citi’s FX desk estimating around ~$500mln traded at the time. The 30 pip move lower helped JPY's status as the best performer, set to complete London trade essentially U/C against the Buck. USD/JPY now hovers around 161.57, still close to the 161.95 high made in 2024.

HUF was sold in response to the MNB keeping the door open to further interest rate cuts. The central bank cut rates by 25bps as expected to 6.00%. EUR/HUF was bid, hitting highs of 356.92 after the MNB said it "sees room for further interest rate cuts throughout the summer if favourable conditions persist".