The US dollar ended the week as the second strongest currency on the Forex market, losing only to the Swiss franc. Yet some market analysts said that the rally was unconvincing due to a range of political factors that were weighing on the greenback.
One of the major reasons for the dollar’s rally was political uncertainty in the eurozone. Specialists were worried that Italy’s ruling Eurosceptic coalition will clash with the European Union. Additionally, the European Central Bank was showing concern about slowdown of Europe’s economies in the first quarter of this year, meaning that the central bank may extend its asset purchase program beyond September and postpone an interest rate hike.
But the United States had their own share of problems, mostly concerning straining international relationships. The EU voiced displeasure by the USA pulling out from the Iranian nuclear deal and pledged its commitment to the agreement. North Korea was infuriated after the US proposed the Libyan scenario of denuclearization, pointing out that the Libyan government collapsed afterwards. NAFTA talks passed the May 17 deadline without any signs of progress.
EUR/USD declined from 1.1938 to 1.1768 over the week. USD/JPY jumped from 109.25 to 110.75. Meanwhile, USD/CHF slid from 0.9994 to 0.9975 after touching the weekly high of 1.0041.
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