Dollar bounces back after Euro and Yen hit key levels | FX Resea

Trading conditions are getting back to fuller form following the Easter break. After taking another big beating in the holiday-thin trade, we're finally seeing some profit-taking on US dollar shorts from shorter-term accounts. We haven’t seen the euro above 1.15 or dollar-yen below 140 for some time, which could be adding to the excuse for some mild profit-taking. It's also possible the buck is feeling a little better with US equity futures pointing up. After all the recent narrative has been selling everything US, so a bounce in stocks could very well be helping the dollar to recover.

A Japanese Ministry of Finance survey revealed President Trump’s tariffs are already hurting about 10% of Japanese firms, with auto companies reporting cancelled orders and reduced factory hours. Tourism businesses are also fearing a stronger yen could deter visitors.

Meanwhile, Trump has continued to pressure the Federal Reserve, warning of an economic slowdown unless interest rates are cut immediately. In Germany, the government downgraded its 2025 economic outlook to stagnation from a prior 0.3% growth forecast. In the UK, BOE’s Green noted a weaker dollar could ease UK inflation but expressed concern over rising inflation expectations.

Looking ahead, we get a round of Fed speakers including Jefferson, Harker, Kashkari, Barkin, and Cougler, who are all likely to defend Fed Chair Powell and stress the Fed’s independence.