It is clear that the world wants to sell DXY. The problem is, there’s nothing else to buy. EUR might be it but its on the end of a tariff bashing.
AUD follows EUR.
Lead boots are growing wings.
Gold, gold, gold!
Metals picking up some DXY tailwind.
Not miners.
EM meh.
Junk meh.
Yields meh.
Stocks meh.
Credit Agricole sums it up.
Recent client meetings have highlighted that FX investors remain constructive on EUR/USD in the near term.
That seems to reflect lingering USD-pessimism rather than any EUR optimism, however.
In particular, investors worry about the impact of theTrump administration’s policies on the US economy and USD assets.
Such fears intensified last week after the latest threat by President Donald Trump to ramp up US trade tariffs on the EU in June, given the lack of progress in the trade talks between the two.
Admittedly, after a “nice call” with European CommissionPresident Ursula von de Leyen, Trump has shifted again,delaying punitive tariffsto the 9 July deadline.
This has encouraged another round of EUR/USD buying. In addition, comments by US Treasury Secretary Scott Bessent that the USD is not “weak” at current levels emboldened USD bears.
As we know, FX is in the business of buying the least dirty shirt. But at the moment it more like buying the dumpster that is least on fire.
AUD will probably grind higher for now as the various dumpster fires rage around it. But, let’s not kid ourselves, the child president could upend that any second.
