ING strategist Francesco Pesole notes that despite higher Oil prices and geopolitical uncertainty, the Dollar has only found limited support as resilient US equities and month‑end flows weigh on USD performance. He highlights that high‑beta commodity currencies like the Australian Dollar and Canadian Dollar are currently favored, but warns that once month‑end flows fade, USD gains could accelerate if Gulf negotiations fail to progress.

Risk, flows and FOMC shape USD

"In theory, this should be a favourable environment for the dollar, yet USD has found only limited support so far. We see two reasons. First, US equities continue to show remarkable resilience, and corrections in RoW stock markets have also not been dramatic."

"That remains a key missing link for a sustained dollar rally; EUR/USD, like many other USD crosses, currently shows a higher beta to global equities than to oil prices or rate differentials. Second, month‑end flows should be acting as a drag on the dollar, given relative US equity outperformance in April."

"Once month‑end flows roll off in the coming days, barring tangible progress in negotiations, we would expect USD gains to accelerate."

"For today, some focus will be on consumer confidence figures, although a wait‑and‑see approach ahead of tomorrow’s FOMC decision and big tech earnings (Alphabet, Microsoft, Amazon and Meta) could keep volatility in USD crosses somewhat contained."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)