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Dollar Suffers as Negotiations Ease Trade War Concerns

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USD

The United States Dollar Index suffered in yesterday’s trading and was able to break to the lowest level in 5 weeks, after global markets gained optimism from possible negotiations between China and United States on trading. The DXY is now trading at 89.00, eyeing next support area around 88.50, if the Risk-ON trading is set to continue for today. US equities were able to gain more than 2.5%, Dow is trading around 24400.

EUR

EUR/USD climbed to the highest level since mid-February. CFTC reports are showing that EUR longs are around the highest levels ever. Several reasons are coming behind the rise of these Longs: euro yields are expected to rise, the economy is showing good signs of improvement, and crises that happened in Europe receded. Central banks seen moving $500 billion of reserves from USD to EUR, especially after the opposite trade strategies that is being followed by the European Union and United States, where free trade deals are being established between the EU and Asia, on the other side U.S. protectionism is on the rise.

GBP

The Pound is chasing the highs, targeting the highest levels since the Brexit. The GBPUSD is trading at 1.4240, as investors are more confident that the Bank of England will raise interest rates in May. GBP was among the strongest currencies in yesterday’s trading, supporting GBP crosses. GBPJPY was able to trade back above 150 level.

Gold

Gold is trading at the highest price since February as the USD is suffering. Analysts are expecting gold prices to surge and outperform for several reasons such as the need to hedge for inflation and the increased risk of an equity market correction. Gold is trading in a consolidation pattern since the beginning of 2018, posting higher lows and lower highs.

Oil

Oil is still fluctuating near the highs, gaining support by the concerns that tensions in the Middle East could lead to a shortage in supply. The continued rise in the Geopolitical tensions will always affect oil prices. Oil is now trading at $65.62

The most important economic events:

  • USD Consumer Confidence Index (MAR): (GMT 14:00) – Forecast (131.0) – Previous (130.8).
  • USD Conf. Board Present Situation (MAR): (GMT 14:00) – Forecast (N/A) – Previous (162.4).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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