The US Dollar Roller Coaster Pattern Makes Currency Trading Difficult


Recent price actions suggest the greenback has cut losses earlier in the first trading session of the week after hitting multi-year lows against the British Pound and the Australian dollar.

Forex traders are definitely going through a rough patch in 2021 with the world’s most powerful defying expectations extending its predicted decline – at least for now. At the time of writing, the US dollar index used to gauge the strength of the greenback against major world currencies including the euro, pound sterling, Swedish krona and Japanese yen was trading at 90 400 index points.

However, recent price actions anticipate more pullbacks in the coming hours, although they previously reversed two back-to-back pullbacks as the greenback continues to gain strength from rising US Treasury yields.

Forex traders are now focusing on the bigger picture in the world’s largest economy and all eyes will be on Federal Reserve Chairman Jerome Powell’s speech to Congress in the coming days. The head of the US monetary policy team should echo remarks that they remain determined to use all monetary ammunition at their disposal to support the $ 2 trillion savings.

That being said, global investors will also be looking for any signals that reveal whether the world’s most powerful central bank leader is troubled by higher long-term borrowing costs after real rates on long bonds first crossed zero. times in 8 months.

Predicting the direction of the dollar becomes a difficult bet to make as some forex traders see a light at the end of the tunnel, but the tunnel is more like a tough race. Despite the significant success achieved since the outbreak of COVID-19, concerns about new, potentially more resistant variants of COVID-19 persist.

For an overview of all of today’s economic events, check out our economic calendar.

This article originally appeared on FX Empire

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