Some thoughts from Monex on the USD:
- Solid employment growth in the United States: good employment figures in March point to good economic health, which could delay the Fed’s rate cuts.
- Bond Yields: Strong growth and rising commodities have pushed yields higher, increasing the attractiveness of the dollar.
- Market Dynamics: Despite a brief delay, there is potential for significant technical breakouts in major key pairs, suggesting the dollar is poised to strengthen, especially if CPI points higher this week.
- Central bank policies: the accommodative changes expected from the ECB and the BoC contrast with those of the Fed and should strengthen the attractiveness of the dollar
One risk to a rise in the dollar this week is that a strong CPI pushes USDJPY to 152 and triggers possible intervention. This should only mean short-term pressure on the dollar, but a risk worth considering.
Also think it is important to monitor global growth for the dollar. There have been green shoots in the data in other parts of the world, which also explains some of the dollar’s recent weakness.
This article was written by Arno V Venter on www.forexlive.com.
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