Dollar Performance Against Major Currencies
The US Dollar was strongest against the Japanese Yen, while it fell against other majors: EUR +0.27%, GBP +0.32%, JPY +0.03%, CAD +0.24%, AUD +0.41%, NZD +0.45%, CHF +0.26%. For USD itself, changes were: EUR -0.27%, GBP -0.32%, JPY -0.03%, CAD -0.24%, AUD -0.41%, NZD -0.45%, CHF -0.26%. EUR/USD traded near 1.1550 and GBP/USD near 1.3240, with both supported by a softer Dollar. USD/JPY was volatile near 159.70, with attention on 160.00. WTI crude stayed above $112.00, supported by Hormuz disruption and supply risks, while OPEC+ agreed to lift May output. Gold held near $4,660. Key events include EU PMIs and Sentix, US Durable Goods Orders, Canada Ivey PMI, Japan earnings and current account, and the RBNZ rate decision, followed by US PCE, GDP, jobless claims, and US CPI later in the week.Comparing Last Year With Today
We should remember that this time last year, in April 2025, hopes for a US-Iran ceasefire pushed the US Dollar Index down toward 100.00 as safe-haven demand faded. Today, the dollar is significantly stronger, trading above 104, reflecting a different set of global risks and a more resolute Federal Reserve. This contrast from last year shows how quickly geopolitical narratives can shift currency valuations. The events of April 2025 saw WTI crude oil prices elevated above $112 a barrel due to the Strait of Hormuz disruption. While current tensions in the Red Sea are supporting oil, prices today are more subdued around $85, showing the market is not pricing in a direct superpower confrontation. Still, we see supply tightening, with recent EIA data showing a 1.5 million barrel draw in U.S. crude inventories, which could keep prices volatile. Last year’s jump in the ISM services prices paid component highlighted how quickly energy shocks feed inflation. We are seeing a similar pattern now, with the latest Consumer Price Index (CPI) data showing inflation remains sticky at 3.2% year-over-year. This persistent inflation is why the Fed is holding interest rates higher for longer, supporting the dollar, unlike its more “cautious” stance in 2025. The key lesson from last year is that headline risk can cause sharp reversals, making this a challenging environment for directional bets. We should consider buying volatility through options, as sudden news of either escalation or de-escalation in current conflicts could trigger significant price swings in oil and currency pairs. Straddles on WTI futures or EUR/USD could be an effective way to position for a large move, regardless of the direction. We also saw the USD/JPY pair flirt with the 160.00 level in April 2025, prompting intense speculation about intervention from Japanese authorities. We are in a similar territory again today, with the pair above 151, and Japanese officials have already increased their verbal warnings. The playbook from last year suggests that derivative traders should be wary of holding large long positions and could use put options to hedge against a sudden, sharp strengthening of the yen. Risk-sensitive currencies like the Australian dollar rallied hard on the 2025 ceasefire news, demonstrating their sensitivity to shifts in global risk appetite. This shows that any signs of easing tensions in today’s conflicts could cause a similar spike in the Aussie. We should therefore watch AUD/USD options for opportunities to position for a rapid increase in risk-on sentiment in the coming weeks. Create your live VT Markets account and start trading now.
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