With the Yen bearing the brunt of the risk rally, the Dollar saw some delayed benefits. Economists at ING believe that the USD/JPY pair could bounce to the 135 region.

Oil-sensitive currencies may continue to enjoy decent momentum

“Improving sentiment asymmetrically hits the Yen given it is accompanied by an unwinding of dovish Fed bets: the USD/JPY might rebound to the 135.00 area, even though we favour another decline in the pair beyond the short term.”

“Oil-sensitive currencies may continue to enjoy decent momentum as we see more upside risks to oil prices. The Canadian Dollar is also benefiting from the general improvement in American (North and Latam) sentiment but lacks a domestic tightening story, so its rally may start to run out of steam sooner than other peers (like MXN and NOK).” 

“We think the small USD recovery seen yesterday could be one of many along a gradual decline path, but would favour some consolidation around current levels today.”