Strategy Video: Dollar, Euro, Pound Overextended on Central Bank Outlooks?
• Rising FX volatility levels are amplifying the focus on and impact of monetary policy speculation
• Key policy-related event risk next week will quickly indicate if the markets are over-stretched
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Is the Dollar overbought? Are the Euro and Pound oversold? Those are not easy questions to answer, but establishing expectations for a common fundamental theme they share - monetary policy expectations - can put us on the right path. Where the greenback has advanced on a number of fundamental contributions, a swell in rate expectations has been particularly important in the most recent push. Meanwhile, European rates have already corrected aggressively in anticipation of easing and the hawkish pricing for the BoE has eased back materially. We look across the majors with the most heavily skewed speculative backdrops and discuss whether the upcoming event risk will play critical roles in short and medium-term direction in today's Strategy Video.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.