In European morning trading, major currencies are moving very little. The dollar is stable as markets consider recent US tariffs, especially the 50% tariffs on Brazil. As a result, changes in dollar pairs have been minimal. The EUR/USD pair is holding steady near its highs, especially after breaking past 1.1800 last week. Significant option expirations at 1.1700 are preventing any drops. On the other hand, USD/JPY showed some upward movement but pulled back slightly as Treasury yields dipped.

Market Indicators

Despite this, the USD/JPY pair remains well above 146.00. The 100-day moving average is vital for short-term buying control, along with the 100-hour moving average. Looking ahead, the focus will shift to US weekly jobless claims, although trade news continues to be important. The US Consumer Price Index report next Thursday is also on our radar. So far this week, we are seeing a continuation of stability. The currency markets are calm as traders process recent economic changes, especially those caused by new tariffs from Washington, particularly aimed at Brazil. These tariff changes haven’t caused immediate volatility in dollar-based pairs, which are now trading closely together, showing a sense of caution instead of strong confidence. The euro has risen above 1.1800 and remains near that level with little chance of falling. This stability is largely due to large option expirations around 1.1700, which are helping to support the currency. These contracts are acting as a barrier to downward moves, creating a bit of congestion in the market. Until they expire or are adjusted, drops are not appealing. For the yen, while traders attempted to push USD/JPY higher earlier, that effort slowed as US Treasury yields fell following a spike. Still, the pair trades above 146.00, maintaining its short-term strength. This strength is supported by prices staying above the 100-day moving average, with the 100-hour average also providing short-term guidance. We expect these indicators to influence short-term positions unless there’s a sudden change in Treasury yields.

Future Volatility

From our perspective, this seems more like a phase of positioning rather than a reaction. With attention shifting to US employment data and inflation figures next week, we may see increased volatility. Tomorrow’s weekly jobless claims could ignite this shift, particularly if the results are surprising. Traders feeling the effects of volatility should evaluate whether current open interest and options reflect the risks these fundamentals might bring. Last week’s EUR/USD high serves as a key reference point, potentially acting as a ceiling if the CPI figures pressure US interest rates upward. Those managing directional exposure should view this range as a holding pattern until clearer price catalysts appear. Yen traders should also watch for secondary effects from trade actions, especially regarding rates. Lower yields could negatively impact the dollar-yen pairing, making short-term hedging a wise choice ahead of critical data releases. We’re also closely monitoring how inflation readings are distributed across sectors, as this will influence immediate pricing expectations and implied volatility. Currently, market flows are subdued, indicating many are waiting for stronger validation. Those willing to take on some risk might use this period to increase their exposure at key technical levels, especially near moving averages. Pay attention to expiry patterns and important dates since timing will be more significant than direction if volatility decreases in the short term. Create your live VT Markets account and start trading now.

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