Dollar Strength And Risk Sentiment
USD/JPY climbed to about 159.30 on higher US yields and policy divergence between the Federal Reserve and the Bank of Japan. AUD/USD dropped to around 0.6960 as the stronger US dollar and risk mood limited gains. WTI crude edged up to about $90.30 a barrel, then eased from recent highs as ceasefire hopes reduced near-term supply fears. Gold rose towards $4,550, helped by lower yields and reduced oil-led inflation concerns, while geopolitical risks stayed in focus. Upcoming data includes Germany GfK Consumer Confidence (Apr), Eurozone GDP (Q4), the Bundesbank monthly report, US initial jobless claims, and New Zealand ANZ–Roy Morgan confidence (Mar). Friday brings UK consumer confidence, UK retail sales, Eurozone HICP (prelim), and US Michigan sentiment and inflation expectations. WTI is a US crude benchmark sold via the Cushing hub. Prices are driven by supply and demand, geopolitics, sanctions, OPEC quotas, the US dollar, and weekly API and EIA inventory reports, which are within 1% of each other 75% of the time.Positioning Themes Across Major Assets
The current market jitters, driven by fragile ceasefire talks, are keeping the US Dollar strong. We see the Dollar Index (DXY) pushing towards the 100 mark, a level it hasn’t consistently held since early 2025, suggesting a flight to safety is the dominant play. This safe-haven demand is likely to persist, making long dollar positions attractive against weaker currencies. Given the weak Eurozone PMI data from earlier in the week, we expect continued pressure on the EUR/USD. The final Q4 2025 GDP figures for the Eurozone, which came in at a sluggish 0.2%, support our view that the European Central Bank will be slow to match the Fed’s stance. This creates a clear case for considering puts on the Euro or shorting the pair, targeting moves below the 1.1550 level. The policy divergence between the Fed and the Bank of Japan remains the most powerful force driving USD/JPY, which is now above 159. This trend has been profitable since it broke through the 152 barrier back in 2024, and with no signs of the BoJ abandoning its ultra-loose policy, the carry trade is still compelling. We should anticipate continued upward momentum as long as US yields remain elevated. Oil is caught between geopolitical hope and fundamental tightness, keeping WTI around $90 per barrel. While ceasefire talks could temporarily lower prices, we note that the latest EIA report from last week showed a surprise crude inventory draw of 1.8 million barrels. This suggests underlying demand is robust, creating a solid floor for prices and making dips a potential buying opportunity for call options. The surge in Gold to $4,550 is remarkable and reflects a multi-year trend of de-dollarization and central bank accumulation we observed throughout 2025. This isn’t just about the latest geopolitical flare-up; it’s a structural shift, as central banks globally increased their gold reserves by over 800 tonnes last year alone. This underlying bid means gold remains a core holding, and any pullback should be viewed as an opportunity to add to long positions. Create your live VT Markets account and start trading now.
Start trading now – Click here to create your real VT Markets account
