The US dollar is trading in narrow trading ranges against the G10 currencies today, but the calm in the foreign exchange market belies stress in other parts of the capital markets. Equities and bonds have been sold. The hope that an end to the Middle East conflict has faltered amid the conflicting signals from the US, which is sending thousands of more troops to the region, fanning fears of a ground invasion of some time, while Tehran countered US proposals with a set of their own conditions. Front-month WTI and Brent oil futures are trading new highs for the week.
President Trump’s initial 48-hour ultimatum was replaced with a five-day grace period, which ostensibly ends tomorrow. The uncertainty hangs heavy and can be expected to dampen risk appetites today and tomorrow barring constructive developments. The conflict can be on the edge of significant escalation or a resolution.
Prices
G10
• The euro was already struggling to sustain the upside momentum after stalling near $1.1630 yesterday, in front of Monday’s high (~$1.1640), but the Iranian news agency rejection of the US cease-fire proposal was a buzzkill. The single currency subsequently was sold briefly through Tuesday’s low, slightly below $1.1560. It spent most of the North American afternoon trading in a narrow range below $1.1580. The euro is in a narrow range today, unable to make much headway above $1.1570, and hovering near a three-day low, slightly below $1.1550. A convincing break may target $1.1525 ahead of Monday’s low (~$1.1485). There are almost 2.6 bln euros of options at $1.15 and nearly 2 bln euros of options at $1.16 expiring today.
• Even without the benefit of higher US yields, the dollar crept higher against the Japanese yen yesterday. The session high was recorded in the NY afternoon near JPY159.50. This was marginally above Tuesday’s high (~JPY159.20) but below Monday’s high (~JPY159.65). The dollar remains firm but trading choppily between about JPY159.30 and JPY159.55. The market has not given up on JPY160.
• Sterling traded inside Tuesday’s range yesterday. And that range of about $1.3360 to $1.3435 was the narrowest range in two weeks. It has been pushed to a three-day low near $1.3335 today before recovering to about $1.3360. Nearby support may be seen around $1.3315-20, but the key is Monday’s wide range (~$1.3255-$1.3480). Only a break of that range seems notable. Options for GBP1.3 bln at $1.3350 expire today.
• The Canadian dollar has come under pressure in this week. The greenback was initially sold on Monday to about CAD1.3670 on Monday, a five-day low, but recovered to settle around CAD1.3720. It reached CAD1.3785 on Tuesday, and yesterday tested CAD1.3820. It approached CAD1.3840 in Europe today. Initial resistance is seen around CAD1.3850, and above there, targets the CAD1.39 area. The US dollar settled above the 200-day moving average for the first time in two months. It also settled above the upper Bollinger Band (found ~CAD1.3830 today).
• The Australian dollar was turned back from a brief attempt on $0.7000 and was sold back to almost Tuesday’s low (~$0.6940). It slipped further today to a little below $0.6930. The Aussie remains within the range set Monday (~$0.6910-$0.7060). Yet, for the third consecutive session, it frayed the lower Bollinger Band (~$0.6935 today). A break of $0.6900 is arguably more technically significant than close above $0.7000. Options for almost A$1.25 bln at $0.6900 expire today.
EM
• The Mexican peso consolidated in uneventful activity yesterday near its best levels in the past week, apparently helped as it were by the risk-on mood that lifted stocks and bonds. Indeed, Mexico stocks and bonds were among the best performers yesterday. Its 10-year dollar bond yield fell 10 bp and the local currency bond yield fell almost 20 bp. The Bolsa rallied about 2.8%. The dollar has forged a floor around MXN17.67 in recent days. The 20-day moving average is near MXN17.67, and the greenback has not settled below it since the war began. The US dollar is trading higher today and approached MXN17.82. Tuesday’s high was slightly above MXN17.89 and a band of resistance may extend toward MXN17.94. It seems binary: Risk-on in response to a resolution and the peso, likely will return as a market favorite. Risk-off on escalation can push the dollar back above MXN18.00, where it topped out on an intraday basis twice this month.
• The dollar traded with a slightly firmer bias against the yuan yesterday and posted the highest settlement so far this week, slightly above CNH6.90. It is firmer today, near CNH6.9130 in the European morning. Monday’s high was closer to CNH6.92. The PBOC set the dollar’s reference rate at CNY6.9056. (CNY6.8911 yesterday). We had detected a subtle shift and had anticipated that last week could have been first weekly increase in the dollar’s reference rate since last November. While this did not materialize, it could be this week. Stay tuned.
• Indian markets were closed today for the Ram Vamami holiday.
Other Markets
• Yesterday’s equity gains in North America failed to inspire buying today. The only Asia Pacific market to resist the down draft was New Zealand. South Korea led the retreat with a 3.2% drop and the index of Chinese companies that trade in Hong Kong shed 2.25%. Europe’s Stoxx 600 is snapping a three-day advance and giving back most of yesterday’s1.4% gain. US index futures are off around 0.75%-1.0%.
• Bonds are also being sold today. The 10-year JGB yield rose by two basis points, while European yields are most 6-9 bp higher, Italian bonds are the outlier, with the benchmark yield up 11 bp. The 10-year Treasury yield is up four basis points to a little above 4.37%.
• Gold and silver are trading heavily and are below yesterday’s lows. A break of $4400-10 could target $4350 for gold. A break of $67.50 could spur a move to $66 for silver.
• May WTI peaked yesterday slightly above $91.70. Today it has not been below $90.70 and reached a three-day high a little above $94.00. A push above $95 leaves little in the way a retest on $100. Monday’s high was near $101.65.
Data
• US weekly initial jobless claims may draw passing interest today. They have slipped lower in back-to-back weeks through March 13 for the first time this year. The March jobs report is out next Friday, April 3, and the early forecasts are coming in around 51k, after falling 92k in February, which was distorted by strikes and poor weather.
• Canada releases its establishment survey for January employment today. In December, when Canada reported an 8.2k increase in employment, the establishment survey reported a 35.4k decline. Canada reported a 24.8k decline in employment in January. This time series does not typically capture the market’s attention, and it seems particularly dated now.
• Mexico’s central bank meets today. Nearly half of the economists polled by Bloomberg expect a cut. The swaps market is pricing in steady policy. The mid-March CPI readings showed both the headline and core rates are above the upper end of the 2%-4% target and may be accelerating. The economy does appear to have been struggling again before the war on Iran began.
• The eurozone’s M3 money supply grew 3.0% year-over-year in February after a 3.2% pace in January (initially 3.3%). Lending figures were little changed.
• As widely expected, Norway’s Norges Bank stood pat today, with its deposit rate at 4.0%. It was a hawkish hold in the sense that it signaled a hike would likely be appropriate, and the central bank’s projections showed a quarter point hike before the end of the year. The swaps market had a hike fully discounted at the end of H1 26 yesterday, and after today’s central bank meeting, it now has about a one-in-three chance of a 50 bp move. Before the war in Iran began, there was slightly more than a 10% chance of an increase by then.
Reviewed by Marc Chandler
on
March 26, 2026
Rating:
