The dollar continues to move higher. The FX market is leaning toward U.S. interest rates remaining where they are for a more extended period than initially thought—supporting the dollar. The greenback is near the highs from 2022 thus approaching these levels should lead to some caution. With the market always keeping an eye on the BoJ at the current USD/JPY level -149.80 – intervention by the BoJ (selling dollars and buying yen) would cause short-term dollar selling against other currencies. The dollar selling may be brief (48 hours) but will offer a better level to sell dollars and buy currencies.

The non-farm payroll will be released on Friday and early estimates are an increase of 158k jobs. The Fed’s Powell speaks on Monday afternoon and as so often there will be a focus on his remarks. Any suggestion of how long before the Fed cuts rates will create volatility in all the financial markets.

EUR (1.0570): The need for more urgency in how the euro trades raises a flag. The economic data, volatility in oil prices, and the approaching cold months should create volatility in the single-currency. Last week’s low was 1.0488 which led to a bounce to 1.0617. These two levels will be essential and serve as the first support and resistance line. The following levels to watch are 1.0450 and 1.0720.

GBP (1.2200): The pound has not shown any sign of recovering from its recent slide with the probability of the currency moving to 1.1850 increasing. Resistance for the quid is 1.2400, then 1.2720 whereas support will be at 1.2000 and 1.1850. One development we have yet to talk about is the EUR/GBP – in a word: nothing! The range of 0.8585 to 0.8900 keeps both currencies from moving with consistency.

JPY (149.80): There has not been much activity with the yen despite the interest rate difference between the dollar and the yen continuing to widen. This favors dollar buying, while concern over BoJ intervention keeps the buyers from getting too aggressive. Support is at 144.50, resistance at 151.00, and then 152.50.

CAD (1.3580): Oil prices have dropped to $90, pushing USD/CAD higher. The strange trade of Canadian dollar, high oil prices, remains steady while it falls on any weakness in oil prices. The market may be telling us that the Canadian economy may be weaker regardless of oil prices than the other major countries. Employment has been a drag on the economy, while Canadian inflation has moved lower. There will be a shakeout of this recent trading range and, historically, that move can be quick and the currency can move further than expected.

MXN (17.4000): USD/MXN has held onto its recent gains. It remains below the critical 17.5500 level. Above 17.5500, the peso can weaken to 18.2000! Regardless of how high the currency pair rallies, it is best practice to identify and hedge peso expenses in the forward market.

CNH (1.3080): A “top” forms on the daily chart. The high to focus on is 1.3680, which would lead to a further push to 1.4000. Failure of USD/CNH to rally above the 1.3680 high will push the dollar back to 1.2600. With all that said, this currency pair has not made any meaningful move either way.