Rise in US Interest Rates Sends Shockwaves Through Currency Markets

Rising interest rates are affecting currency trading as US rates take center stage. The euro has been choppy in early trading, initially falling before potentially stabilizing around $1.1550. If it bounces back here, traders may consider going long; if not, a potential head and shoulders formation could develop. However, the daily chart shows the euro is looking exhausted.

The US dollar's performance against the Canadian dollar has been notable, forming a hammer on Monday's daily chart. A break above $1.39 would shift focus to the upside, while signs of exhaustion might prompt shorting between now and then.

The US dollar has been positive against the Japanese yen due to rising rates and an ongoing carry trade. It has broken above a 4-day consolidation area, making it a potential setup for getting long on short-term pullbacks. The 160 yen level remains significant, but central bank intervention is not seen as a major concern given previous instances.