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Dollar Forex Market Rally Picks Up Pace

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  • Euro Drops Back After Holiday Break
  • Hawkish US Tone Continues
  • Stocks Poised For Major Earnings Day

The Dollar forex market has returned from the Easter break with more strength to add to its already extremely strong position in the market. Early in the European session on Tuesday, there had been some signs that the Euro may gain ground, this has quickly disappeared though as the US Dollar remains the toughest obstacle to overcome for all other major currencies. Quiet trading on Monday as Europe continued their holiday saw some drop off in the Dollar, though the continuation of hawkish commentary has picked it up again. Meanwhile, stocks will be looking toward a busy day of earnings to negate concerns around Fed policy.

Euro on Back Foot Again

It has been an arduous recent number of weeks for the Euro. It has consistently dropped lower against a Dollar that was showing no sign of easing off itself. The common currency hit a two-year low at the back end of last week moving into the Easter holiday. At the same time, there has not been much of anything positive to help from the Euro side. Divergence from the US on monetary policy combined with the ongoing war on the perimeter of the bloc has not helped. 

A quiet Monday trading session was an opportunity taken by the currency to advance back above 1.08 against the USD. This has been quickly bounced back though as the day has brought more anxiety from the US side with continually hawkish comments from American policymakers. 

Fed Urged to Continue Raising Rates

US Treasury bond yields rose further on Monday. This counteracted any gains for those forex trading the Euro during the otherwise quiet trading day. Yields are already running high amid a cautious market that has enabled the US Dollar Index to capture another new high above 101. The 10-year is now at its highest point since the end of 2018 at close to 3%. 

The noises coming from policymakers have also been very hawkish which has in itself contributed further to the safe-haven position of the USD. St. Louis Fed President James Bullard was quoted as saying that the Fed needed to keep raising rates to 3.5% by the end of the year to fight off rising inflation. 

Stocks Dip Ahead of Big Earnings Day

As well as forex brokers, those trading stocks have continued to dodge through a challenging period in the market. Wall Street has seen a steady move downward with two consecutive negative weeks for the majority of the market. This week has also started out slow. 

Monday trading was very quiet with most of the attention on big earnings to be released before the bell and during the day. J&J will be among the biggest names to report before the bell with analysts and traders alike eager to assess the impact of inflation on the top and bottom lines of major companies.

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.

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