The U.S. Dollar is trading in mixed ranges across the board as FX moves continue to be rather limited after another weekend of escalation in the Middle East’s armed conflict impacting all markets.
Over the weekend, Houthi forces in Yemen, backed by Iran, joined in fighting against Israel. Meanwhile, the White House said U.S. and Iran are holding talks “directly and indirectly,” thus leaving a lot of room for interpretation. In a rare positive comment in the midst of crisis, U.S. President Donald Trump said new Iranian leadership has been “very reasonable.” Equity futures were up, and stocks seem to rebound a bit, but the uncertainty remains over the Strait of Hormuz re-opening, invading Kharg Island, and actually achieving a ceasefire.
As war goes on, other items are being overshadowed such as monetary policy. The Senate Banking Committee is planning to hold its hearing on the nomination of Kevin Warsh to be the chairman of the Federal Reserve as soon as the week of April 13th. As for today, current head Jerome Powell will be giving commentary at a moderated discussion on economics at Harvard University that could move the needle. While mid-week we get labor figures such as JOLTS Job Openings, on Friday we get Non-Farm Payrolls and the Employment Situation for March. There are some bets on the possible end of the Iran conflict with a 60.0% probability it comes in the next couple of weeks.
What to Watch This Week…
- Euro-zone CPI, Tuesday
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
EUR ⇓
The Euro has dropped in value by 4.8% in the past two months as the lack of growth in the Ancient Continent along with the Middle East turmoil is making for a sour shared currency narrative. In fact, the currency is just a little under half a percent away from trading at its weakest level against the Buck since end of July 2025. This week will feature key inflationary data in the form of Consumer Price Index tomorrow and a look at Manufacturing Purchasing Managers Index. There is potential for a Euro rally to develop if suddenly news out of Iran as well as Ukraine help ease tensions for leaders and productivity.
JPY ⇑
The Japanese Yen is up by over half a percent this morning against the Buck as the currency was defended by financial authorities who also explained plans to alleviate depreciation as well as inflation. Japan imports plenty of oil and is highly sensitive to the disturbance seen across oil futures and the prices of barrels reaching multi-year highs. Vice Minister of Finance Atsushi Mimura explained that there is increased concern about crude oil futures speculation and that could lead to some decisive action such as SWAPs for contracts to ease the pain in energy costs. On the monetary front, Bank of Japan’s Governor Kazuo Ueda also told policymakers that supporting the currency is key and likely the best way to do so will be by increasing interest rates, which in a summary of opinions, BOJ members seemed in complete agreement. This time the talk surrounding FX intervention from Japan sounds different.
