Francesco Pesole of ING remarks that robust earnings from Nvidia, along with buoyant equities, have bolstered high-beta currencies while pressuring the Dollar. In the G10, only the Japanese Yen has fared worse. The moderation in oil prices and the steady pricing of geopolitical risks also curb the demand for safe havens. Even with some anticipated stabilisation of the Dollar today, Pesole foresees potential downside risks as the market mood remains skewed away from defensive foreign exchange options.
Risk-on tone pressures safe havens
Improved sentiment has had a significant impact on the dollar over the last 24 hours. Only the Yen took a worse beating in the G10 yesterday. There’s also an intriguing role played by the moderation in oil prices. Market participants currently see no reason to factor in any geopolitical escalation.
Polymarket’s probability of a US strike on Iran by March’s end has been stable at 60% FXStreet(https://polymarket.com). This stability has been a key factor in driving oil prices lately. At this point, any significant escalation seems the most plausible catalyst for a broader dollar rally, especially considering Nvidia’s reassuring results and a dearth of major data releases.
In general, we might observe some stabilisation in the dollar today. Nonetheless, downside risks persist as Nvidia’s earnings continue to influence markets away from defensive currencies.
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
