The US dollar gained this week with help of geopolitical tensions in Eastern Europe and Middle East that were driving the Forex market by the end of the week. The greenback ended the week flat versus the Japanese yen, another currency that profited from the need for safety.
The US currency started the week on a positive note due to speculations about an eventual interest rate hike from the Federal Reserve. Fed Chairwoman Janet Yellen sent confusing message to the market regarding future monetary policy, resulting in a mixed performance for the dollar. Still, most Forex traders considered her comments to be more hawkish than dovish.
The greenback received another boost in the second half of the week from risk aversion, caused by the plane crash over Ukraine and Israel’s offensive in Gaza. While fears receded by the weekend, the theme of geopolitical risks will likely continue to dominate markets next week too.
EUR/USD dropped from 1.3599 to 1.3524, the weakest weekly close since January, while GBP/USD declined from 1.7121 to 1.7085, following the rally to 1.7190 — the highest since October 2008. USD/JPY closed at 101.34, not far from the opening of 101.38.
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