The US dollar demonstrated a massive rally this week thanks to the monetary policy decision from the Federal Reserve and the Bank of Japan. Positive macroeconomic reports also played their part in the performance of the greenback.
The Fed ended its quantitative easing program, in line with expectations of most market participants. Yet the accompanying statement was perceived to be more hawkish than had been expected, resulting in a big jump of the dollar. The rally was supported by favorable economic data that was coming from the United States after the decision.
Some other central banks were making policy decision this week too, and most of them provided no surprises, with the exception of Japan’s and Russia’s central banks. The unexpected monetary easing from the BoJ was more important for Forex traders as it has triggered flight from the yen to the dollar in search of safety.
The previous dollar’s rally stalled in October, and the currency was trading in a range during the past month. Yet the jump during the last week suggested that the greenback may resume its upward movement and strive for new highs.
EUR/USD sank from 1.2674 to 1.2523 (1.1 percent) over the week. GBP/USD dropped from 1.6084 to 1.5993. USD/JPY surged from 108.24 to 112.32 (as much as 3.9 percent), and it weekly high of 112.47 was the strongest rate since February 2007.
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