USD/JPY extended gains overnight and led to broad USD strength in markets. The pair started the new trading day around 114.40 and rose to a high of 114.87 as equities rallied. The Euro, which was benefiting from the risk-off sentiment, is retracing some of the gains from last week and could test the 1.11 level soon. The key area to watch is 1.1050/60 and break below would suggest the topside has been capped at 1.1375 for now and that a move back towards 1.09 is likely.
The Australian Dollar is holding well despite broad USD strength, but failed to break above the 0.7180 level once again. In Asia, it came under pressure and AUD/USD fell from 0.7175 to 0.7130. Meanwhile, the New Zealand Dollar was the worst performing currency overnight, as it tumbled from 0.6675 to a low of 0.6590 amid lower inflation expectations.
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