Forexlive Americas FX information wrap 25 Mar: US knowledge weaker. Dollar principally decrease however off lows

Today, the Trump administration had to deal with the fallout from a botched text exchange between a number of high level government defense officials, VP Vance and an unintended participant – a reporter from the Atlantic, that outlined plans for U.S. forces launching strikes against Houthi targets in Yemen.

True to form, the response was to deny, then deemphasize the importance of the top secret conversation, then put blame on the reporter, and ultimately admit the transgression.

As Adam points out in his “must read” post, the implications for the markets was not important, and although it triggered significant concern over the breach itself, why it happened, and what it means about the security process of the administration, it’s deeper implications lie in the shift toward a highly transactional approach to foreign and domestic policy.

From a fundamental perspective in the US session, data was generally weaker with:

• Philadelphia Fed nonmanufacturing tumbling to -32.5 from -13.1 last month
• Consumer confidence falling tot 92.9 versus 94.0 estimate, and 100.1 last month.
• New home sales came in about as expected
• Richmond Fed was lower at -4 versus +6 last month

Fedspeak today came from Fed Governor Kugler and NY Fed President Williams:

• Adriana Kugler noted that progress toward the Fed’s 2% inflation target has slowed since last summer, with estimates suggesting the 12-month PCE inflation rate stood at 2.5% in February. She highlighted the return of positive goods inflation as a setback, since earlier declines in goods prices had helped suppress overall inflation and manage expectations. Consumer surveys indicate expectations for further price increases in the near term, driven in part by uncertainty surrounding trade policy. Kugler emphasized the importance of closely monitoring both the pace of price acceleration and shifts in inflation expectations. While she acknowledged some signs of softness in recent economic data, she also noted that the labor market remains stable with low unemployment. Overall, her tone leaned slightly hawkish, though her remarks largely aligned with the Fed’s broader message of data dependency and cautious observation
• William’s comments were limited saying only that households and firms are seeing heightened uncertainty.

The fundamental economic news helped to send rates lower on the day:

• 2-year yield 4.017%, -2.0 basis points
• 5-year yield 4.068%, -2.5 basis points
• 10-year yield 4.315%, -1.6 basis points
• 30-year yield 4.655%, unchanged

The US dollar was mostly lower versus the major currencies as well but were also off their lowest levels of the day. The greenbacks biggest decline was versus the JPY with a fall of -0.52%. The dollar also fell vs the CAD by -0.33% despite comments from Pres. Trump that Canada (a Mexico) had “stepped it up a lot”.

Although the USD is ending the day mostly lower, the price action had it’s share of ups and down (or downs and ups) with the exception of the USDJPY which fell for most of the session until the price approached its 100 hour MA at 149.474. The low for the day reached 149.54. Resistance is back at the 150.00 level with the 100 hour MA now support.

The EURUSD traded down to swing area support at a swing area between 1.0761 and 1.0776, bounced toward the falling 100 hour MA at 1.0834 and back down to 1.0791 currently. The 100 hour MA above at 1.0791, and the swing area down to 1.0761 will be the levels to eye for a break in the new trading day.

The GBPUSD bounced off support at the rising 100 bar MA on the 4-hour chart yesterday and again today. That MA comes in at 1.29108 going into the new trading day. If broken to the downside it would likely shift the short term bias to the downside. Absent that, and the buyers are in firm control.

The AUDUSD traded above and below the 100 and 200-bar MAs on the 4-hour chart near 0.6305. The price is back below those MA currently at 0.6300 keeping sellers more in control. A swing area between 0.6254 and 0.6268 was home to lows this week, last week, adn the week before last. On the topside, a move back above the 100/200 bar MA on the 4-hour chart would have traders looking toward the 100-day MA near 0.6337.