The US dollar rally has steadied after recent gains, with EURUSD rebounding from 1.1469 to 1.1552 before the greenback found support. The 1.1550–1.1575 range remains key resistance, while USDJPY holds near 153.50 after rejecting a brief dip to 152.82. Despite softer risk sentiment, FX volatility remains low, with USDJPY one-month vols near 18-month lows, suggesting limited contagion from equities and bonds. A sharper pickup in cross-asset volatility would be needed to test whether the dollar or yen acts as the stronger safe haven.
Elsewhere, the Bank of England held rates in a narrow 5-4 vote, signalling dovish guidance that lifted odds of a December cut above 70% and offered modest GBP relief. GBPUSD has rebounded above 1.3100 while EURGBP eased below 0.8800. In contrast, AUDNZD extended its rally beyond 1.1550, the highest since 2013, as a near 100-basis-point yield gap supports the trend. With the US government shutdown deepening and limited data on tap, traders are watching whether volatility in risk assets spills over into FX as the VIX hovers near the key 20 level.
For more information, please find attached the Forex report by John J. Hardy, Global Head of Macro Strategy, Saxo Bank
