The US dollar is not giving up ground against its trading partners. The US dollar index has just minted fresh 2-year highs, crossing the 102 level for the first time since March of 2020.
Investors are waiting for definite signs that the US Federal Reserve will be hiking its benchmark rate by 50 basis points in May as they enjoy a little respite from global uncertainty by holding the safe-haven currency.
EUR/USD
The EUR/USD has failed to generate any gains after the re-election of Emmanuel Macron as president of France. Macron's pro-EU stance, relative to his challenger for the job, Marie Le-Pen, might have been expected to give the Euro a boost after it was revealed he had secured the top position for another five years.
Yet, the EUR/USD remains pressured by the discrepancy between the US Federal Reserve's rhetoric and the European Central Bank's (ECB). Each attempts to deal with decades-high inflation, but the Fed is expected to move faster and more aggressively than the ECB. The EUR/USD trades at 1.064 after falling 0.6% on Tuesday.
USD/JPY
The USD/JPY has paused its rapid decline against the USD amid reports that Japan and the US discussed implementing a coordinated currency intervention to stem further losses in the yen. The USD/JPY has since fallen back to 127 from 128 but is not budging too far from its 20-year low.
Intervention may have to be significant to counter the Bank of Japan's ultra-easy monetary policies that sit in sharp contrast to the Fed's possible 50 basis point hike scheduled for May.
AUD/USD
The AUD/USD is one of the week's worst performers, falling 4% amid the sharp drop in commodity prices such as iron ore (which has fallen 9.3% on the week).
The AUD/USD is now trading below 0.7200, after falling 0.6% on Tuesday, and could look to move further lower. However, Australia is about to release its quarterly inflation data, which is supposed to cement the Reserve Bank of Australia's resolve to hike rates in the country for the first time in more than a decade.
GBP/USD
The GBP/USD, today's worst performer, down more than a full percent, is suffering from poor economic data from the UK. Numerous reports have recently been released that have investors worried about the economic state of the UK.
Last week, the Bank of England's Governor Andrew Bailey warned about the risks of a possible recession and a slowdown in the UK labor market. The GBP is trading at 1.269 against the greenback after falling 1.2% over Tuesday.