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Dollar steadies as Middle East tensions boost oil and FX rate bets
USDCHF rose 0.9% to around 0.8150, while the USDJPY held above the 100-hour moving average near 162.6 as traders weighed oil-linked risk and yield differentials.
The U.S. dollar finished little changed as geopolitical tensions in the Middle East continued to outweigh a lack of U.S. economic data, with market attention shifting to rising oil prices, escalating U.S.-Iran rhetoric, and potential shipping risks through the Strait of Hormuz, according to Forexlive.
In currency trading, USDCHF was the biggest mover, climbing about 0.86% on the day and trading near daily and recent highs around 0.8150, a move linked to yield differential demand. USDJPY dipped in the European session but remained above the 100-hour moving average near 162.64, with the session low around 162.80.
Forexlive also noted that U.S. dollar positioning for other pairs remained tied to technical levels, with USDCAD falling after two higher sessions but stalling near the 200-hour moving average around 1.40756.
In the background, U.S. Treasury yields moved higher across the curve on Wednesday, led by the front end, as another round of bond selling followed a $13 billion 20-year auction described as drawing sluggish demand, contributing to expectations that the Federal Reserve could keep policy restrictive for longer. Longer-term yields also climbed even as the curve flattened modestly on shorter-dated underperformance.