It was tough to make sense of the dollar’s sharp drop yesterday amid a more risk-off mood in markets. Adam had a good post here outlining the reasons why and I would like to think it is perhaps a combination of everything that really struck down the greenback.
But as the BOJ stuck with easy policy, USD/JPY is posting a strong recovery and we are seeing flows back into the dollar as calmer heads prevail on the day – at least for now. The only currency really fighting back against the dollar today is the franc, and for good reason considering the policy pivot by the SNB this week.
For now, the technicals are the spot to pay attention to and dollar bulls are making their case known with GBP/USD pulling back to near 1.2300 and AUD/USD falling back below 0.7000 on the day after having run into Fib retracement level resistance: