Forex Trading Forecast: The Bears Charge and FX Traders are Ready
The dollar has suffered. A 1.1 percent tumble through the past week marks the currency’s worst performance since October 18 – notably, when the greenback bottomed out a three-month slide.
The Euro’s weakness in the wake of the European Central Bank’s most recent bout of intensifying its dovish forward guidance was hardly apparent last week. Yet, there is little evidence that the ECB’s threat of QE will disappear anytime soon.
The Japanese Yen surged against major forex counterparts as the S&P 500 and Japanese Nikkei 225 tumbled. A rush to safety favored the JPY, and the fact that it trades at critical resistance (USDJPY support) suggests the week ahead could bring further volatility.
The British Pound struggled to hold above the 1.6800 handle after failing to clear the February high (1.6821), but the fundamental developments coming out next week may generate fresh highs in the GBP/USD as the economic recovery in the U.K. gathers pace.
Gold saw the largest weekly decline in four months this week with the precious metal off by more than 3.4% to trade at $1335 ahead of the new York close on Friday.
The Australian Dollar may correct lower after hitting a five-month high last week as soft Chinese economic data threatens to undermine RBA interest rate hike bets.
The Chinese Yuan (also called the Renminbi) attempted a recovery in its opening move of this past week, but the currency would ultimately end back up on the cusp of 12-month lows against its US counterpart.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.