Up to now, traders have preferred to buy the dollar on the back of rising bond yields and geopolitical uncertainty. However, Israel's strikes in Iran have preserved oil infrastructures and are seen by the financial community as a first step towards de-escalating the conflict. What's more, bonds are in an important support zone. Similarly, the EUR/USD is testing support at 1.078, which corresponds not only to the August low but also to the line that joins the lows of the last year. Counter-trend indicators are oversold and even showing bullish divergences, a sign that a rebound could well materialize towards 1.0866/1.0905.

Copyright: Bloomberg

Meanwhile, the USDJPY is testing a Fibonacci ratio of 153.89. It's hard to be aggressively short at current levels, even if the daily indicators are overbought. Prudence being the order of the day, we'll be content to watch for initial support at 150.37 before 148.13. The next resistances are at 157.44 and 161.59. The USDCHF has also rallied to its minimum target of 0.8688 and is content to nibble upwards tick by tick. The next target is 0.8726, followed by 0.8790 and initial support at 0.8812.

In the commodity currencies, USDCAD is only a few ticks away from its 2022 highs at 1.3968, while AUDUSD and NZDUSD still have some downside potential before rallying to August lows of 0.6493 and 0.5876 respectively.