European equities hold in positive territory on Tuesday as risk appetite continues to pick up, with investors cheering the news that China has eased its COVID restrictions further. Still, a flurry of disappointing economic data out of major economies along with persistent inflation worries continue to cap gains in the global markets.
Despite upbeat risk sentiment, the dollar rallied today, erasing recent losses to settle back above the 104.00 figure that continues to stay in the market focus at this stage. Adding to the greenback’s bullishness, Fed’s Williams said recession is not his base case, and the central bank has a path forward to bring inflation down.
As the buck regained strength across the market, USD/JPY accelerated the ascent to exceed the 136.00 figure ahead of the opening bell on Wall Street. The pair has been rising for the third session in a row, approaching 24-year highs seen around 136.70 last week. Should the dollar challenge the peaks, the 137.00 barrier will come into the market focus next while the major target arrives at 140.00.
The US currency looks set to extend the ascent in the near term. However, the buck could be negatively affected by PCE data and Powell’s speech due on Wednesday. Should the Fed’s preferred inflation indicator come in lower than expected, rate hike expectations will ebb somehow.
In this scenario, the USD index could get back below 104.00 amid profit-taking. In a wider picture, the safe-haven buck will stay supported by recession concerns that continue to spread globally.