Category: USD

  • Dollar Plummets Amid Economic Uncertainty – Monday 10 March, March

    The US Dollar is currently experiencing a significant decline, reaching a four-month low of 103.6 on the dollar index. This downturn is attributed to growing anxieties surrounding the US economic outlook and recent comments from both President Trump and Fed Chair Powell acknowledging economic uncertainties. The dollar’s sharpest losses were against safe-haven currencies like the Japanese yen and Swiss franc, indicating increased risk aversion among investors.

    • The dollar index fell to 103.6, a four-month low.
    • The dollar experienced its worst weekly performance since November 2022, dropping about 3.5%.
    • President Trump acknowledged a “period of transition” and didn’t rule out a recession following tariff policy changes.
    • Fed Chair Powell acknowledged increasing economic uncertainty.
    • Investors are awaiting CPI and PPI data for inflation insights.
    • The Fed will reveal updated economic projections at next week’s FOMC meeting.
    • The dollar weakened broadly, particularly against the Japanese yen and Swiss franc.

    The scraped text suggests a negative outlook for the US Dollar in the short term. Mounting economic concerns, coupled with dovish signals from key figures like President Trump and Fed Chair Powell, are weighing heavily on the currency. The increased demand for safe-haven currencies further underscores the market’s risk-averse sentiment, indicating that investors are seeking safer alternatives amidst the current economic climate. The upcoming CPI and PPI data, as well as the Fed’s updated economic projections, will be crucial in determining the dollar’s future trajectory.

  • 17 Feb ideas

    GBPUSD Outlook – Monday – 17 Feb 2025

    The weakening of the US dollar reflects market expectations of lower interest rates and easing trade tensions, while currency manipulation remains a key issue in global trade dynamics.

    The GBP’s recent strength is driven by expectations of persistent inflation, cautious monetary policy from the BoE, positive economic data, and geopolitical developments. However, the anticipated rise in unemployment could pose a risk to this outlook. Investors will continue to monitor these factors closely, as they will influence the pound’s performance in the near term.

    – The combination of a weaker USD and a stronger GBP suggests potential upside for the **GBP/USD pair** in the near term. If the USD continues to weaken due to lower interest rate expectations and easing trade tensions, and the GBP remains supported by inflation, cautious BoE policy, and positive economic data, the pair could move higher.

    – However, risks remain:

      – If US economic data surprises to the upside (e.g., stronger growth or inflation), the USD could rebound.

      – If UK unemployment rises more than expected or inflation shows signs of easing, the GBP could weaken.

      – Geopolitical developments (e.g., Ukraine conflict, UK-EU relations) could also impact the pair.

    Conclusion

    The GBP/USD pair is likely to experience upward pressure in the near term due to the contrasting forces of a weakening USD and a strengthening GBP. However, investors should closely monitor key economic data (e.g., UK unemployment, US inflation) and geopolitical developments, as these could shift the balance of risks for the pair.

    Trade idea:

    USD-1; GBP+4; GBPUSD+3; Bullish. Wait for dip (might not reach entry price – Review)

    Technicals: M Bullish; W Bullish; D Bullish; 4H Bullish/Ranging

    Entry 1.2495-1.2525; SL 1.2450; TP 1.2730; Risk 0.3%

    Update Tue 18/02/2025: UK 3M Unemployment rate came in at 4.4% low than the expected 4.5% – Inflationary and Bullish for Pound

    Entry Adjusted an anticipation UK Inflation rate and US FOMC Minutes (Wed), and UK Retail (Fri) to 1.2454, SL 1.2404 TP 1.2743

  • Mixed USD thanks to Trump

    The US dollar index falling below 107 and reaching its lowest level in over two months indicates a weakening of the dollar relative to a basket of other major currencies. This decline is primarily driven by:

    Weak US Economic Data: The unexpected drop in retail sales and signs of cooling inflation (as reflected in the PPI components feeding into the PCE index) have increased market expectations that the Federal Reserve may cut interest rates further. Lower interest rates typically reduce the attractiveness of holding US dollars, leading to a weaker currency.

    Trade Tensions Easing: President Trump’s delay in implementing reciprocal tariffs has reduced some trade-related uncertainty, which can weaken the dollar as investors move away from safe-haven assets like the US dollar.

    Focus on Currency Manipulation: The Trump administration’s broader trade strategy, which now includes examining currency manipulation, could also impact the dollar. If other countries are perceived to be manipulating their currencies to gain trade advantages, it could lead to further volatility in currency markets.

    In summary, the weakening of the US dollar reflects market expectations of lower interest rates and easing trade tensions, while currency manipulation remains a key issue in global trade dynamics.

    How is Currency Manipulation Done?

    Currency manipulation can be achieved through several methods:

    1. Foreign Exchange Interventions: A central bank buys or sells its own currency in the foreign exchange market to influence its value. For example, a country seeking to weaken its currency might sell its own currency and buy foreign currencies like the US dollar.

    2. Monetary Policy Adjustments: A central bank can lower interest rates or engage in quantitative easing (printing money) to weaken its currency. Lower interest rates reduce the attractiveness of holding that currency, leading to depreciation.

    3. Capital Controls: Governments can impose restrictions on the flow of capital in or out of the country to control currency movements. For example, limiting the amount of foreign currency that can be purchased by domestic entities.

    4. Verbal Interventions: Officials may make public statements to influence market perceptions and expectations about the currency’s value, a practice known as “jawboning.”