U.S. Dollar Set Up for Weekly Reversal Bottom
The U.S. Dollar posted a strong gain today and is now in a position to close higher for the week. A weekly closing price reversal could indicate the start of a 3 to 4 week rally. Investors are not too happy with the projected pace of the global economic recovery. Many cite yesterday’s action by the Fed as a sign that the recovery will be slow and labored. Investors also fear that the global economy may not be able to sustain itself if government stimulus plans are lifted.
The GBP USD suffered the biggest loss on Thursday following negative comments from Bank of England Governor King. King said that he supported a weaker currency. Traders believe that his comments mean the economy is still weakening and the Bank of England is not in a position to end its stimulus programs for some time.
The EUR USD weakened as commodity and equity markets lost favor with investors. Less demand for higher yielding assets will likely keep pressure on the Euro. Don’t expect a long-term change in trend, but watch for consolidation over the short-run.
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