During the European morning trade, the dollar continued its decline, facing pressure across the board. As month-end approaches, the dollar fell further this week following yesterday’s sell-off. Significant movements were observed, with EUR/USD briefly surpassing 1.1700, and USD/JPY dipping from 144.70 to a low of 143.75 before slightly recovering to 144.40.

The dollar’s downtrend was apparent against major currencies as USD/CHF slipped below 0.8000 for the first time since 2011. USD/CAD decreased by 0.3% to 1.3687, and AUD/USD rose by 0.3% to 0.6530. In equities, European indices showed some recovery following the previous day’s drop, while S&P 500 futures rose by 0.3% and Nasdaq futures by 0.4%.

Market Vigilance

In other markets, gold and silver experienced brief increases before stabilising, with gold flat around $3,332 and silver up by 0.6% to $36.50. The currency market remains vigilant ahead of upcoming US data, including weekly jobless claims, Q1 final GDP, and durable goods orders. Month-end may provide more clarity as traders navigate ongoing geopolitical tensions.

With the dollar continuing to slip during early European hours, we’re watching a confluence of established trends and short-term reactions that hint at deeper, potentially longer-running shifts in sentiment. The movements, particularly in USD/JPY and EUR/USD, aren’t just momentum-driven—they’re grounded in broad-based weakness that’s persisted over the past several sessions. When the euro pushes decisively above a level like 1.1700, especially this close to month-end rebalancing, it’s not only a symptom but also a cause of further unwinding elsewhere.

Scholars of foreign exchange often remind us that the movements in USD/CHF tend to reflect periods of caution—below 0.8000 is a long way down and no fluke. It’s not simply about what the dollar is doing, but what others are no longer afraid to do in response. Policy divergence hasn’t been the main topic recently, yet we can’t ignore its effects rippling across these pairings. A three-tick slide in USD/CAD may not seem dramatic on a normal day, but taken in concert with AUD’s quiet strength, it’s part of something building below the surface.

Risk appetite seems to have stabilised modestly, but don’t be fooled—it’s not enthusiasm that’s driving equities higher. It’s a return to wait-and-see mode. European indices have pulled themselves up slightly, matching the gentle uptick we’re seeing in S&P futures and Nasdaq contracts. It’s not a surge but more a breath of relief.

Meanwhile, gold and silver briefly attracted buying, perhaps from those anticipating further softness in the dollar or hedging ahead of near-term data threats. Gold holding flat and silver edging upwards may not matter to everyone, but to those of us watching closely, it confirms that market positioning still leans towards caution.

US Data Impact

The upcoming US data releases—jobless claims, finalised Q1 GDP, and durable goods—aren’t just daily items on the calendar this time. They sit nested in a week marked by restless moves and muted conviction. Remember, these are all backward-looking indicators, but their influence still hangs heavy when anticipation is high and conviction is low.

We should be prepared for brief surges in activity followed by reversals, particularly as rebalancing flows continue and liquidity fluctuates. Directionality is less important right now than timing and reaction. It’s not a time for oversized risk—rather, it’s about watching when participants pause, and when they jump back into action.

Month-end often brings anomalies—pricing inefficiencies, false starts, misplaced confidence. This one in particular may amplify those. Whether flows lean further into the dollar’s weakness or bounce in relief will likely depend less on headlines and more on positioning, which is currently stretched in various corners of the globe.

In these kinds of environments, our priority should be on structure and precise execution. Entries require more patience. Exits need sharper discipline. Price levels that once held for months are being tested and broken in hours. We’re not navigating random chop but reactions that come fast and last just long enough to catch the complacent off guard.

With geopolitical stress pulling at sentiment from the side-lines, none of this is straightforward. There’s clarity possible—but it rarely comes gift-wrapped. It has to be read in movement, volume, and how others are responding—not what they’re saying.

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