EUR/USD, USD/JPY, DXY flows: pressures offer $ support
Risk negatives offering dollar some early week support into key meetings
Not a positive start to the week with pressure on risk sentiment coming from both energy and from AI. With labs agreeing on the need to slow AI development and OpenAI delaying its IPO from this year, related chip stocks and OpenAI investor stocks such as Softbank off markedly. Brent meanwhile continues to feel upward pressure, if so far held off last week’s highs, amid the concerns over the worsening supply pressure points across the region from Saudi’s pipeline to Bab el-Mandeb strait.
Dollar starts the week better bid with EUR/USD in particular drawn back towards the lower 1.1550 level and with 1.15 the next step back down if it can’t steady there. Along with the energy risks and risk off tone, BoJ and Fed meetings remain the week’s key focal points. Ahead of the latter, BoJ’s Executive Director Nakamura quoted from a panel discussion highlighting the need to not look through shocks when they are frequent, and to take into account ‘non-linear reactions of domestic prices to external shocks’. With the dollar lift, USD/JPY is still consolidating to the upside of the 154.50/60-1530~ band off the recent lows, with a test of the depth of supply on any extension through there this week.