All eyes remain focused on oil. As long as the barrel is priced above $100, the market anticipated that the Federal Reserve would maintain a restrictive monetary policy for an extended period. This setup mechanically supported the dollar through interest rate differentials. However, the first signs of stabilization, or even a decline in energy prices, are gradually changing the landscape.
The bond market is beginning to reflect this shift. Long-term yields are easing slightly, showing that the dominant risk is no longer solely inflationary but is also linked to a slowdown in growth. This change in regime is fundamental for the dollar: it marks the beginning of a transition from an environment of rate-driven support towards one that is potentially more neutral, or even unfavorable.
At the same time, US economic fundamentals remain robust. Consumption is resisting, the labor market is not deteriorating and leading indicators do not suggest that there will be an imminent contraction. However, this resilience limits expectations of aggressive rate cuts, which prevents a rapid weakening of the dollar.
Finally, markets are becoming more demanding regarding the geopolitical narrative. Political announcements are no longer enough: only concrete evidence of the opening of the Strait of Hormuz and the normalization of energy flows will validate a true regime change.
Technically, EUR/USD has approached the key threshold at 1.1645 to consider a new bullish sequence toward 1.1910/20. Meanwhile, the dollar index stalled at 99.15, remaining on a negative trend.
Elsewhere, we remain attentive to a breakout from the range on USD/JPY above 160.45 to restart the yen's bearish momentum. The Aussie remains stuck at its 0.7200 resistance without yet forming the anticipated pause. A close above 0.7200/15 would open the door for a direct continuation of the rally toward 0.7285/0.7325. Alongside, we will monitor 0.5930 on the Kiwi, a level that must be cleared to consider a return to 0.6000.
