The US dollar demonstrated a nice rally last week with help of the policy statement of the Federal Reserve. Is it possible for the greenback to extend its rally this week as well?
Truth be told, it is unlikely that the dollar will be able to rally much more over the course of the next five trading days. The rally after the Fed announcement was too big and by the end of the previous week the currency has already demonstrated that the upward momentum is losing steam. It is unlikely that the greenback will be able to extend rally without any additional boost and there are no big events expected this week. This does not mean that the US currency should necessary end the rally and fall, but it definitely should take a breather before another thrust upward.
As for economic calendar, this week promises to be rather quiet, but sill there will be several important reports, including the consumer confidence report, data about new and pending home sales, and the unemployment claims report. No big changes to the indicators are expected, therefore the impact of the macroeconomic fundamentals should be limited.
As for the events outside the United States, there is also nothing particularly new. The situation in Ukraine remains a significant geopolitical risk, but for now things look to have calmed down, and traders turned their attention away from Eastern Europe. China continues to show signs of slowing economic growth, yet the market weathered the impact of poor manufacturing report released over the weekend rather well. All in all, currently is does not look like there will be important events in the world that may help or hinder the US currency.
As a result of such considerations, analysts, including DailyFX and Forex Crunch, are generally neutral on the dollar.
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