The US dollar is showing modest strength against most G10 currencies, with the euro and Swiss franc being minor exceptions. Recent talks between the US and China reportedly reached a mutual understanding regarding the Geneva Agreement, but this development has had little effect on foreign exchange markets. The dollar remains in a consolidative phase, continuing a trend observed in recent days. Meanwhile, emerging market currencies are mostly firmer, though the South Korean won is a notable outlier, dropping by 0.5% despite a strong rally in the Kospi index, which reached a three-year high.

Asia Pacific Markets

In the Asia Pacific region, the US dollar is showing signs of upward momentum against the Japanese yen, nearing resistance around JPY145.30. If surpassed, this could trigger further gains toward the JPY146.00-30 range. The yen has become more sensitive to US 10-year Treasury yields again, suggesting interest rate trends are back in focus.
In Australia, the local dollar is fluctuating near its annual highs, maintaining a range between $0.6490 and $0.6535. Positive technical signals suggest a potential move toward $0.6625 and beyond. 

European Markets

The euro remained within last Friday’s trading range, showing little directional conviction and staying above the $1.1400 level for now. Speculative positions on the euro remain large, though short-term downside risks persist due to stable US employment data and expectations of a hawkish pause from the Federal Reserve.
The British pound weakened following a disappointing employment report, falling to nearly $1.3455 before rebounding slightly. Sterling continues to trade under pressure, and a close below its 20-day moving average would undermine the technical outlook. Expectations for a mild contraction in April’s UK GDP further cloud the near-term outlook for the currency.

American Markets

Despite a tentative agreement between the US and China, markets showed little immediate response, especially regarding the dollar. The deal might ease some trade restrictions, such as China's approval of magnet exports to US automakers. The Dollar Index remains confined within a narrow band, trading between 98.95 and 99.20. Market participants are watching closely to see whether the dollar's current pattern marks a base or signals further downside. The upcoming May CPI data is expected to show a slight increase, reinforcing the Fed's likely reluctance to cut interest rates. Fiscal concerns persist, with the US budget deficit widening in Q1 2025 to nearly 7% of GDP.