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The USD gained strength against the EUR, JPY, and GBP, with USD/JPY breaking through a 40-year high of 161.95-97 to reach 162.42. The pair showed strong momentum in the Asia-Pacific session before consolidating above key resistance. Meanwhile, EUR/USD remains trapped between its 100-hour and 200-hour moving averages at 1.1382 and 1.14084, with traders awaiting a decisive breakout. The RBA meeting minutes emphasized a hawkish stance, keeping rates restrictive despite recent oil price declines, which have reduced market expectations for further rate hikes.
The USD/JPY breakout signals strong dollar demand, which could pressure other majors like EUR/USD. Traders should monitor whether EUR/USD breaks its consolidation range, as a move above 1.14084 would reinforce bullish bias, while a drop below 1.1382 could trigger selling. The RBA's policy uncertainty adds volatility to AUD/USD, though current market pricing suggests limited scope for tightening.
Investors should watch for follow-through buying in USD/JPY and potential EUR/USD directional moves. The RBA's future policy path remains critical, with energy prices and inflation data key factors. Traders may also assess how the Fed's stance interacts with the RBA's hawkishness, affecting cross-currency flows.
