Forex Today: Dollar extends its decline as sentiment improves

Valeria Bednarik FXStreet

What you need to take care of on Wednesday, May 18:

The American dollar edged lower across the FX board as the currency extended the bearish corrective decline that began on Monday. Upbeat US data helped the case for a better market mood, with global indexes closing in the green.

Nevertheless, the underlying concerns remain the same. Tensions between Europe and Russia continued after the latter invaded Ukraine. Russian Deputy Foreign Minister Andrey Rudenko was on the wires and said that Ukraine has practically withdrawn from negotiations.

Federal Reserve chair Jerome Powell offered a speech. Powell failed to surprise investors, repeating that the central bank is comfortable with 50 bps rate hikes. He also mentioned that they could speed up or slow down the pace of hikes accordingly to the economic health. Speaking of which, Powell added that the underlying strength of the US economy is really good at the time being. US indexes retreated from their highs with his words but retained the green.

The EUR/USD pair surged to 1.0555, helped by ECB’s Governing Council member Klaas Knot, who said that a 50 bps rate hike should not be excluded if data suggest inflation keeps broadening and accumulating. He also added that a 25 bps hike in July would be realistic.

GBP/USD hit 1.2498 and finished the day nearby, with the pound underpinned by a stronger-than-expected UK jobs report. The ILO unemployment rate contracted to 3.7% in the three months to March, while the April Claimant Count Change fell to -56.9K. Market participants ignored mounting Brexit tensions. Foreign Secretary Liz Truss updated the House of Commons on the government's intention to introduce legislation to make changes to the Northern Ireland Protocol. The government would prefer a negotiated solution with the EU but will anyway work on changing the protocol.

The AUD/USD pair trades above the 0.7000 threshold, while the USD/CAD extended its slump and trades near the 1.2800 level. The better performance of equities underpinned commodity-linked currencies, despite softening gold and oil prices. The bright metal settled at $1,816 a troy ounce, while WTI is now changing hands at $109 per barrel.

The USD/JPY pair ended the day little changed at 129.35, while USD/CHF fell to 0.9938.

US Treasury yields ticked higher, with that on the 10-year note flirting with 3%.

Dogecoin price hints at one more fall towards $0.07

Like this article? Help us with some feedback by answering this survey:

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD holds firm near 1.1850 amid USD weakness

EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.

GBP/USD holds medium-term bullish bias above 1.3600

The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.

Gold remains supported by China's buying and USD weakness as traders eye US data

Gold struggles to capitalize on its intraday move up and remains below the $5,100 mark heading into the European session amid mixed cues. Data released over the weekend showed that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Fed expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.

Cardano steadies as whale selling caps recovery

Cardano (ADA) steadies at $0.27 at the time of writing on Monday after slipping more than 5% in the previous week. On-chain data indicate a bearish trend, with certain whales offloading ADA. However, the technical outlook suggests bearish momentum is weakening, raising the possibility of a short-term relief rebound if buying interest picks up.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.