Negotiations will resume tonight. However, the expectations have affected trading sentiment in the Asia-Pacific region as well as currency movements.

The US dollar defended the level of 103.2 in the morning. It consolidated in the range of 102.9–103.2. It declined sharply on Friday after Jerome Powell's speech.

The US dollar slightly recovered in the Asian session. However, it slid below its multi-week high of 103.6. Although inflation still exceeds the 2% target, hopes for a pause in monetary tightening continue to exert pressure on the US dollar.

Traders also took notice of another crucial factor. The Fed has tightened the lending standards due to the banking crisis. This is why US banks limit liquidity injections into the economy. A decrease in the money supply usually leads to an increase in the US dollar.

The yen took advantage of the fall in the US currency last Friday. It rose to 137.5. However, it failed to retain momentum.

On Monday, the dollar/yen pair again tested the resistance level of 138.0. After that, it consolidated in the price corridor of 137.5–138.0. Earlier the yen advanced amid a fall in US stocks after a pause in negotiations. However, expectations of a new round of talks also limited its upside potential.

If the risk appetite keeps declining, the pair may drop lower. It could test the support levels of 137.6, 137.3, and even 137.0. The resistance level is located at 138.20. However, speculators could increase short positions on the yen in case of another rally.

The Australian dollar is likely to maintain the downward movement. Risk appetite is falling and oil prices are fluctuating in a wide range. Apart from that, the People's Bank of China kept its interest rate unchanged.

The Australian dollar, which serves as a liquid proxy for the yuan, tumbled following that news. The AUD/USD pair reached an intraday low of 0.6629 on Monday morning.

However, the Aussie also rebounded from the low of 0.6607 where it was trading at the end of last week. It climbed slightly to 0.6637. The resistance level is seen at 0.6680.

At the same time, it was moving in the downward range of 0.6628–0.6670. For this reason, a decline to the support level looks possible. In any case, the Aussie is likely to be rather volatile today.
The New Zealand dollar has been rising for a while ahead of the Reserve Bank of New Zealand meeting. The kiwi managed to retain its bullish bias last week as traders were anticipating another rate hike on Wednesday.

Despite the fact that inflation fell to 6.7% in the first quarter of 2023, it is still very far from the 3% target. After a slight decline in the morning, the kiwi entered again the upward channel of 0.6265–0.6294.

At the end of the Asian session, the kiwi/dollar pair rose to 0.6284. However, the further movement of the pair will depend entirely on the trajectory of the greenback. So, a price reversal in the American session may take place.

00:00 Intro
00:18 US Fed
00:48 Jerome Powell
01:19 Talks on the debt ceiling
02:33 USDX
03:17 Money supply (USD)
03:39 USD/JPY
04:42 AUD/USD
05:44 NZD/USD

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