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Dollar Forex Market Begins to Weaken




  • Dropping Treasury Yields See USD Slide
  • Euro Gains Traction on Lagarde Speech
  • Mixed Fortunes Continue on Wall Street

The forex market noted some movement on Tuesday as the US Dollar gave up some of its recently very strong safe-haven demand. While the currency still remains very much in control amid broad economic uncertainty, there was a rare opportunity for other major currencies to gain some ground. This was taken by the Euro which advanced while the Pound Sterling also gained slightly. The turmoil continued on Wall Street with tech stocks again rocked by dismal numbers and a disappointing outlook from some major names. 

USD Drops Back but Remains Resilient 

Those forex trading the USD were able to see a rare day on Tuesday by recent standards. A day when there were more sellers than buyers of the greenback. While the US Dollar Index remains very high thanks to turbulence and widespread risk aversion, it has demonstrated that traders are willing to trade even in the current climate. US Treasury Bond yields which had been at recent highs fell back and likely preempted some weakness in the currency. 

Looking ahead to today, there are a couple of significant events on the docket in the US. The first of these is Durable Goods Order data that traders will be keeping an eye on. Later in the day, the FOMC meeting minutes from their May meeting will doubtless be analyzed during this period when the Fed remains under major scrutiny. 

Euro Leads Other Majors With Gains

The Euro was able to gain the most ground against the Dollar on Tuesday. The EUR/USD moved to a new monthly high around 1.075 as ECB President Christine Lagarde indicated that interest rates would likely move into positive territory. This marks something of a shift in fiscal policy direction for the bloc which has subsequently bolstered the common currency. 

More is expected from the ECB President later today as she delivers a speech at the World Economic Forum in Davos. The currency pair has moved back slightly on Wednesday morning but could be set for another strong consolidation depending on how the speech is perceived by analysts and traders alike. 

Stock Trading Turbulence Continues

Wall Street has continued its recent trend of choppy action. A positive start to the week was knocked back in trading yesterday. Trading was reasonably flat outside of the Nasdaq and tech but there were big warning signs there for traders. Forex brokers did not see a big rush on the Dollar due to other factors, but a very much under pressure tech sector was hit heavily again.  

Snap was the huge loser with more negative guidance. The stock nosedived more than 40% and certainly sent shockwaves around the sector. Still, traders and analysts alike are questioning if a bottom has been reached or if the worst fear of a recession to come could prove true. Much will continue to depend on the Federal Reserve's reaction.

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.