The US dollar is under considerable pressure following its recent decline in North America. Concerns over a potential Israeli strike on Iranian nuclear sites have intensified risk aversion, pushing July WTI oil to its highest since early April. Surprisingly, the greenback has not gained from this risk-off sentiment, while gold has surged to around $3300. Despite this weakness, the dollar has slightly rebounded from its lowest levels, with markets now awaiting further direction from North American developments. Equities in Asia showed gains, yet Europe and US futures are pointing lower. Bond yields are climbing, suggesting little refuge in fixed-income assets today.

Asia Pacific Markets

In Japan, the dollar dropped to an eight-day low near JPY144.10, dipping below both the 20-day average and previous support levels. It briefly broke below JPY144.00 before stabilizing around JPY143.50, with stronger support expected near JPY143.25 and JPY142.00. Trade talks with the US are dragging, partly due to unresolved issues over tariffs. Meanwhile, April's trade deficit was worse than expected, with weaker exports and a dip in imports.
In Australia, the local currency had dropped below $0.6400 amid perceptions of a dovish stance from the central bank. However, a broad weakening in the US dollar helped the Aussie rebound toward $0.6460 before slipping back slightly.

European Markets

The euro maintained support around $1.1220 before climbing to nearly $1.1355, though it later found renewed support at $1.1310. The next significant resistance appears near the month’s high of $1.1380.
Sterling surged to a three-year peak of about $1.3470 following a surprise rise in UK inflation, especially in household utility costs. The 1.2% monthly gain in CPI was the largest in two years, with core inflation also rising notably. This inflation spike may delay Bank of England rate cuts, though upcoming PMI data is expected to show continued weakness in economic activity, keeping the outlook uncertain.

American Markets

Following Monday’s rally driven by Moody’s downgrade, dollar bulls appear to have lost momentum. The greenback slipped close to 99.40 in early European trading—its lowest in two weeks—before recovering toward 99.80, where fresh selling emerged. Currently, support is seen between 99.00 and 99.25, and a close above the 100.00 mark is necessary to halt the downtrend. The Treasury will auction $16 billion in 20-year bonds today, a maturity that typically sees weaker demand compared to 10- or 30-year issues. Meanwhile, US Treasury yields have risen, with the 10-year yield climbing to 4.54%.