Weekly Trading Forecast: Dollar, Euro and Yen Trends Grow Fundamentally Stretched
USDollar has topped five-year highs, EURUSD has within reach of breaking a decade long range and USDJPY recovered half of a 15-year decline in two years. Can the FX market extend these incredible moves?
Many of the ‘majors’ pushed multi-month or year extremes in favor of the Greenback, and the Dow Jones FXCM Dollar Index (ticker = USDollar) powered to a five-year high this past week.
While no major easing program has been thus far announced, the overhanging threat of additional stimulus, against the current economic backdrop, seems believable for Euro bears.
GBP/USD may face increased volatility next week as U.K. wage growth is projected to uptick in September, while the Bank of England (BoE) is widely expected to retain a cautious outlook for the region.
The Japanese Yen may recover from six-year lows as global slowdown fears fuel risk aversion, triggering liquidation of carry trades funded in the low-yielding unit.
The AUD may be exposed to further weakness following a crash through key support as surging expectations for FX market volatility detract from its yield appeal.
Gold prices were softer this week with the precious metal off by a mere 0.10% to trade at $1171 ahead of the New York close on Friday.
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