Insights 
VT 
Key Points
- Dollar Index (USDX) steady around 100.15, while USD/JPY held at 156.53.
- Traders wary of yen intervention near 158–162 levels amid holiday-thinned liquidity.
- NZD pressured ahead of Wednesday’s RBNZ rate decision, with markets pricing in a 25 bps cut.
The US dollar traded broadly stable on Monday, with investors hesitant to take large positions ahead of several key global events and thin trading conditions due to the Thanksgiving holiday in the US.
The yen held around 156.53 per dollar, stabilising after Finance Minister Satsuki Katayama’s warnings last week raised speculation of imminent intervention.
Market participants believe Tokyo could act if the yen weakens beyond 158, with liquidity conditions later this week providing an ideal window for swift action.
Meanwhile, Takuji Aida, an economic adviser to the Japanese government, reaffirmed that Japan is prepared to intervene directly to counter excessive yen weakness.
Policy Divergence Keeps USD Supported
The dollar index (USDX) remained steady near 100.15, supported by firm US yields despite increasing bets on a December rate cut. Comments from New York Fed President John Williams, suggesting scope for policy easing “in the near term,” reinforced expectations that the Federal Reserve may begin trimming rates soon.
Even so, the dollar retained strength as other major economies contend with their own policy challenges. The euro (EUR/USD) stayed capped near $1.1520, and sterling (GBP/USD) traded at $1.3097 as markets awaited the UK’s budget announcement on Wednesday.
Finance Minister Rachel Reeves is expected to strike a balance between stimulus for growth and fiscal prudence to reassure investors of Britain’s commitment to debt control.
Focus Shifts to RBNZ and Australian CPI
The New Zealand dollar (NZD/USD) was subdued around $0.5609, having lost nearly 8% since July amid mounting recession risks. Markets are fully pricing a 25 bps rate cut from the Reserve Bank of New Zealand on Wednesday but remain divided over whether the easing cycle will extend into 2026.
In Australia, the AUD/USD hovered near $0.6460 ahead of Wednesday’s CPI release, which is expected to show inflation holding at 3.6% year-on-year.
A sticky print could temper expectations for further RBA rate cuts, according to Corpay strategist Peter Dragicevich, who noted that “a persistent CPI could reinforce the view that the RBA may not cut again this cycle.”
Technical Analysis
The US Dollar Index traded marginally lower at 100.04, slipping 0.05% intraday but holding above its 50-day moving average near 99.60.
Momentum indicators show mild consolidation, with MACD lines flattening — suggesting a pause before the next directional move.
Immediate resistance sits at 100.80, while support lies around 99.20. A sustained break above 101.00 would indicate renewed bullish momentum.
Cautious Outlook
The dollar’s trajectory this week hinges on yen intervention risks, UK fiscal headlines, and RBNZ policy guidance.
While a rate cut narrative keeps longer-term pressure on the greenback, short-term demand may persist as investors seek safety amid geopolitical and policy uncertainty.
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