Last week was very important for the US dollar because the currency reversed its bearish trend and strengthened versus most of its counterparts. This week can be even more important as it may confirm the trend or break it.
Most analysts, including Daily FX, Action Forex and Forexyard, are pretty optimistic about the US currency. The spreading unrest in Northern Africa and the Middle East, the renewed concerns about European
Thereâs one factor that can significantly harm the greenback: the quantitative easing. Economists are already talking about QE3, QE4 and even QE5. The anticipation of another round of stimulus by the Federal Reserve that will debase the dollar isnât good for the US currency in the long run. But in the shorter term it can be easily muted by other events, so this bearish factor likely wonât influence the currency this week unless some major news would come from the Fed.
Of course, a currency rarely moves similarly against all of its counterparts, so we have to take into account the relative strength of other currencies. Forex Crunch in its forecasts predicts gains of the dollar against the euro, the yen and the pound. The strong economies of Australia and Canada will likely allow their currencies to outperform the US dollar.
One important thing you have to remember: this week is rich with major economic reports from all around the world. Therefore, it can define the behavior of the dollar for the long time.
EUR/USD is currently near the support level of 1.3440–1.3500 and can move further down if it’d break this level. USD/JPY has broken the resistance level of 83.40 and now may rally to 84.50.
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