USD Graphic Rewind 07.12
USD INDEX GRAPHIC REWIND
The dollar managed to rebound in N.American trade on Friday after the euro failed to hold above 1.2700 at its 2-month high. Many investors speculated that the euro had appreciated too fast and sold the single currency ahead of the weekend. Early this morning in Asian trade, the dollar added to those gains as political uncertainty in Japan following the DPJ losing their upper-house majority led to some significant yen weakening. The euro has also been on the move over-night and early in European trade, trending lower as technical traders warn of a bearish resumption after its failing to breach a key level on Friday.
Looking ahead, equities have been trading flat to mildly lower ahead of US corporate earnings season which gets underway today after the NY close and will dominate proceedings for the coming weeks. If, as expected, earnings roundly beat forecasts expect to see the dollar continue its re-bound, after several weeks of being beaten down, as investors bet once again on the US recovery. However, if earnings disappoint this does not mean the dollar will weaken further, it is our position that the dollar is well situated to benefit from both risk-on and risk averse themes.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.