Dollar Faces New Obstacles

The dollar came under pressure early this morning for a variety of reasons including a lingering risk-off trade in equities, bullish euro-zone economic data and month-end positioning that favors the yen and euro.

USD/JPY challenged 114.00 overnight and stayed generally well-bid through the Asian session after Bank of Japan Governor Haruhiko Kuroda ruled out QE tapering after the BOJ announced no change in interest rates. Kuroda added that negative interest rates are appropriate for meeting the bank’s price targets, and any premature discussion of ending QE could confuse the markets.

Accordingly, USD/JPY lingered at 114.00 until the North American session kicked off. USD/JPY retreated back towards 113.00 in sympathy with losses in equity futures, as well as on technical resistance perched just above 114.09. USD/JPY last traded at 113.29, 0.40% lower from Monday’s U.S. close.

EUR/USD is racing higher at the open, fueled by bullish German labor market data (jobless rate dropped to 5.9% from 6.0%), EU inflation and GDP measures, both of which beat expectations. As a result, the euro broke free from 1.0700 and shot up to a three-day high of 1.0750 for a sizable gain of 0.50%.

By Bryan Smith