The U.S. dollar has been taking back some lost ground against the euro and the British pound, but the absence of any significant market moving news coupled with pre-holiday torpor is translating into mostly range-bound trading for the dollar pairs.
The euro challenged 1.0500 just ahead of the European close, but was blocked by resistance that has been building from 1.0458 to 1.0483. As a result, the euro was returned to 1.0465 but is still holding a solid 0.50% gain against the dollar. Cable drifted into the red after repeated attempts to breach 1.224 failed. GBP/USD is fractionally lower at 1.220.
Finally, USD/JPY peaked at 116.83 on the heels of upbeat U.S. labor market data, lingering at this level and then retreating to 116.20, giving the yen a gain of 0.60%. While there has been the usual risk of yen repatriation trades for the dollar, there hasn’t been the same exodus from USD/JPY seen at prior year-ends. In the last 2 weeks of 2015, USD/JPY fell 3%, but has only dropped half of that this year end. This stems from expectations the dollar will continue to strengthen as the Fed sets up for another rate hike in 2017.