USD bear returns with a vengeance.

Elsewhere, it is interesting to note that risk sentiment is very strong again and how that is impacting the smaller G10 currencies. NZD has rebounded in spectacular fashion against the greenback, forming a pronounced hammer candlestick. EURSEK is showing signs of reversing after the big consolidation on recent risk aversion and the Riksbank dovishness. While NOK looks weak on the crude oil reversal, EURNOK may find resistance here on the good risk sentiment vibes.

Looking ahead
We are set for a spectacle today at Fed Chair Powell’s semi-annual testimony before a the House Financial Services Committee as Trump is out once again berating “too late” Chair Powell in very late US hours (this morning in Europe, in fact), claiming that rates should be “at least two or three points lower” and expressing the hope that Powell is in for a tough treatment in his testimony today.

A NATO summit up today could prove interesting for the euro, as Spain is injecting drama ahead of the two-day summit that kicks off today in refusing to raise defense spending targets to 5% of GDP as the rest of the European NATO members are willing to do. As well, French president Macron complained that the Israel and US attacks on Iran “lack a legal basis”. The weaker the solidarity vibe, the more euro supportive, as it encourages the idea of urgency in Europe to raise defense spending and invest domestically.

There is some noise as well in the press that Japan and the US are at odds on military spending promises, with Japan apparently reluctant to commit to fixed spending levels as a percent of GDP.

FX Board of G10 and CNH trend evolution and strength.
Note: If unfamiliar with the FX board, please see a video tutorial for understanding and using the FX Board.

Quite clear that the FX Board does not pick up on intraday action as the JPY readings on momentum are flat – interesting to see the status on JPY in another session or two. Elsewhere, the euro has taken the lead in the plus column as NOK has lost the most steam on the reversal in crude oil prices, while the US dollar may be tilting back into broad bear mode.

Table: NEW FX Board Trend Scoreboard for individual pairs.
EURNOK at current levels will flip into a positive trend at the end of the day, but let’s give it another session or two to see if the backup reverses. Elsewhere, watching that USDJPY trend status like a hawk over the next couple of sessions, as well as whether EURCHF can finally break through the stubborn resistance into 0.9425.