USD: Equity recovery is keeping volatility low – ING
Source Fxstreet
Away from US politics, FX markets remain very subdued. Volatility is low and the temptation will be to rotate back into carry even if there are risks associated with the preferred funding currency (Japanese Yen) or the preferred target currency (Mexican Peso), ING’s FX strategist Chris Turner notes.
DXY to continue trading in the 104.00-104.50 range
“On a quiet day, we think investors will take a keen interest in US earnings releases. Two of the Magnificent Seven (a basket of seven tech stocks, lost close to 8% this month) report second-quarter results. With surveys suggesting investors are expecting earnings results to drive the next leg in the equity rally. Tonight's release therefore will have a big say in whether the rally resumes.”
“Higher US equities normally keep traded FX volatility levels low and support the carry trade. Previously, this would have been USD negative, but USD deposit rates at 5.38% for one-week money means that USD is an expensive sell. These conditions do mean, however, that there is a large burden on the Bank of Japan to deliver a rate hike and a sizable reduction in Japanese government bond purchases on 31 July.”
“The US calendar is pretty bare today and there doesn't seem to be a strong reason to take DXY out of a 104.00-104.50 range.”
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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Bitcoin experienced a sharp decline this weekend, briefly erasing its 2025 gains and dipping below its year-opening value of $93,507. The cryptocurrency fell to a low of $93,029 on Sunday, representing a 25% drop from its all-time high in October. Although it has rebounded slightly to around $94,209, the pressures on the market remain significant.
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Market dynamics are also being influenced by Bitcoin whales—investors holding large amounts of Bitcoin—who have been offloading portions of their assets, consequently stalling price rallies even as positive regulatory developments emerge. Despite these sell-offs, analysts from Glassnode argue that this behavior aligns with typical patterns seen among long-term investors during the concluding stages of bull markets, suggesting it is not indicative of a mass exodus.
Notably, Bitcoin is not alone in its struggles, as Ethereum and Solana have also recorded declines of 7.95% and 28.3%, respectively, since the start of the year, while numerous altcoins have faced even steeper losses.
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