Tuesday introduced a mild shift in tone as risk sentiment improved, encouraging modest dollar selling. Equity markets firmed and Treasury yields edged lower, reducing support for the greenback and allowing major counterparts to recover part of recent losses.
The move was orderly rather than aggressive, suggesting repositioning rather than a fundamental shift in outlook.
EUR/USD
Technical Analysis
EUR/USD rebounded from support, breaking above short-term consolidation resistance. Momentum indicators turned upward, signaling renewed buying interest. However, the move remained contained within February’s broader range, indicating recovery rather than breakout.
Fundamental Analysis
Dollar softness stemmed primarily from yield movement rather than euro strength. With no major Eurozone data releases, traders attributed gains largely to shifting risk appetite.
GBP/USD
Technical Analysis
GBP/USD followed EUR/USD higher, reclaiming previously lost ground. The pair’s recovery preserved its medium-term bullish structure, though resistance overhead limited follow-through.
Fundamental Analysis
Improved global sentiment supported sterling indirectly. Investors favored higher-beta currencies when risk appetite strengthened, benefiting GBP despite unchanged UK fundamentals.
USD/JPY
Technical Analysis
USD/JPY pulled back modestly, retracing part of its prior rally. The correction remained shallow, holding above key structural support.
Fundamental Analysis
Lower US yields reduced carry appeal temporarily, allowing the yen to recover modestly. The move reflected positioning adjustment rather than a structural change in policy divergence.
Market Outlook
Markets began showing early signs of directional testing, though conviction remained limited pending upcoming macro signals.