The US dollar remained volatile even as economic data showed the labor market is strong and inflation rate is close to the Federal Reserves’ 2 percent target. Accordingly, experts have attributed last week dollar’s weakness to President Trump’s comment after saying on Thursday that the US dollar is too strong and that he will push for a weaker currency.
However, the euro-area currency is predicted to fall below parity against the US dollar this year, as central bank policies continue to differ.
Business confidence in the region has plunged in recent weeks amid lower than the expected growth rate, while Greece’s financial crisis once again threaten to break the Union apart.
The European Central Bank is therefore expected to go on with its huge quantitative easing programme, keeping the euro weak.
The growing popularity of France’s anti-Brussels candidate Marine Le Pen and her pledge to call a Frexit referendum should she win the election could also push investors to sell-off the currency.
Overall, the US dollar remained strong but uncertainty cloud its short-term outlook, while the Euro-area is yet to resolve Greece issue and face possible Frexit as it awaits both French election and official triggering of the Brexit process in March. The single currency is expected to dip further against the US dollar as traders and investors are likely to sell off the currency ahead of France election in April.
This week, EURJPY, GBPUSD and NZDJPY top my list.
EURJPY
The Euro single currency is facing low sentiment amid the political uprising in the Euro-area. While on the other hand, the Japanese yen remained a haven asset and likely to remain attractive as investors scramble to avert uncertain in both the US and Europe.
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Another reason why this pair is a good sell, after this pair dropped to 109.22 record-low on 19th, June 2016. It has failed to break out of post-Brexit high (124.08) since then and seems to have established a range between 124.18 and 111.96 price levels. But with the renewed sell-off of the euro single currency, we could see this pair plunging to 115.27 support levels.
Therefore, this week I am bearish on EURJPY as long as price remains below 119.86, 20-day moving average. I will be looking to see below 118.55 for 115.27 targets, a break of that level could give us 111.96 support, target 2.
Last week, GBPUSD broke loose after President Trump comments on Thursday, however, the pair has gained back almost everything it lost due to that comment. This week, I remain bearish on this pair as the Brexit condition and the Euro-area financial issues deepened ahead of March Brexit date.
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While the US uncertainty continued to impact dollar strength, the weakness revealed in the UK consumer spending and the cooling job market is likely to reinforce sellers’ interest ahead of official Brexit in March.
NZDJPY
This pair dropped 51 pips last week but below our projection. However, it closed below 81.02 resistance levels. This week, I remain bearish on NZDJPY and will be looking to add to my position below 79.92.
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.
The dollar slipped on Monday towards a three-week low as Treasury yields traded near recent lows and traders awaited crucial U.S. inflation and retail sales data in coming days.
Elsewhere, it was a quiet start to a data-heavy week for foreign exchange markets. The euro climbed back above $1.19 while the British pound rebounded from a two-month low.
The dollar’s performance has been tied to U.S. Treasury yields for most of 2021, after concern about rising inflation in the United States and a stimulus-fueled economic rebound triggered a jump in Treasury yields in February.
A fall in U.S. yields last week triggered the worst week for the dollar in 2021. With yields inching lower on Monday, it was back under pressure.
Federal Reserve Chairman Jerome Powell said in a U.S. media interview released on Sunday that the U.S. economy was at “an inflection point” and looked set for a strong rebound in the coming months, but he also warned of risks stemming from a hasty re-opening.
Investors are now waiting for U.S. March inflation data due on Tuesday.
“We are set to see the first evidence of the much anticipated surge in inflation that is widely expected through the coming months as base effects from a year ago begin to take effect as the sharp declines post-COVID start to fall out of the annual calculations,” MUFG analysts said.
They said the dollar’s fortunes could well “remain linked to 10-year yields”.
The benchmark 10-year Treasury yield was at 1.664% after dropping to as low as 1.6170% last week. It had surged to a more than a one-year high of 1.7760% on March 30.
The dollar index, which measures the U.S. currency against a basket of currencies, weakened 0.2% to 92.03. The euro initially dropped but later recovered and was up 0.1% to $1.1915.
Bitcoin traded above $60,000, closing the gap to its record high.
Against the pound the dollar initially gained before reversing course. The British currency was last up 0.5% at $1.3763 after briefly touching a two-month low of $1.3669 as traders cheered the latest phase of the government’s economic re-opening plan.
The dollar fell 0.3% to 109.33 yen versus the Japanese currency.
U.S. dollar net short positions have fallen to their lowest in nearly three years, according to data published on Friday.
ING analysts noted that speculators had cut their net short dollar positions for the 12th consecutive week, which could prove a headwind for further dollar gains.
“At this stage, the dollar has lost all its positioning “advantage”, having a neutral speculative positioning, which suggests we should no longer see dollar rallies against most G10 currencies exacerbated by the unwinding of USD shorts,” they wrote.
Naira exchanged at N485 to a United States Dollar on Friday, April 9 2021 at the parallel market. Against the British Pound, it traded at N670 and N574 to a Euro.
Naira traded at N485 to a United States Dollar on Wednesday 07, April 2021 at the black market. While against the British Pound it sold at N670 and N573 to a single Euro as shown below.