• The dollar’s resilience should not be understated
• EUR/USD hovers near key support with large expiries in play today
• USD/JPY flirts with key resistance region, 140 being eyed next?
• AUD/USD looks resigned to test the March and April lows again
• DAX closes in on record highs again as equities maintain the optimism
• ECB’s de Guindos: There is still scope to keep raising rates
• BOE’s Bailey: I do not envisage balance sheet returning to pre-financial crisis level

Markets:

• USD leads, GBP lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields up 1.9 bps to 3.600%
• Gold down 0.3% to $1,975.66
• WTI crude down 0.2% to $72.67
• Bitcoin up 0.1% to $27,365

It was a quiet session with not many headlines, as some parts of Europe are on holiday and with there being no major economic releases whatsoever.

That did not stop the dollar though, as it continues its grind higher and to test key levels in EUR/USD and USD/JPY.

The former is closing in on key support near 1.0800, although there are large option expiries limiting the downside push for now. Meanwhile, the latter is also running up against recent highs around 137.77-91 at the moment as buyers look for a breakout towards 140.00.

This comes despite equities continuing to show much optimism, with European indices rallying hard after the Wall Street gains yesterday. US futures are also slightly higher, so that is helping with the mood. Of note, the DAX is just inches away from fresh record highs set last year at 16,285-90.

As the dollar holds more resilient again, GBP/USD is seen down 0.4% to 1.2440 as the retreat this week continues while AUD/USD is down 0.3% to 0.6640 as the aussie is dragged down by softer jobs data earlier.

It’s a rare sight to see the dollar move higher in a time where stocks are also performing well, but it is what it is at the moment in markets.

Traders have been quick to price in relatively dovish Fed expectations since the regional banking crisis but perhaps that is now backfiring as high inflation is keeping the Fed on course to hold rates higher for longer, alongside economic conditions that are holding up in the US.

This article was written by Justin Low at www.forexlive.com.