Since the beginning of April the Dollar Forex market has remained in an upward trend, rising to an all-time high of 8.3324 against the British Pound (GBP) Thursday evening. The Dollar has been rising against the majority of currencies, in part due to the current concern over the fragile state of the global financial system. It is believed that the dollar will continue to rise if the downward pressure on the dollar remains strong.
- Major currencies weakened against the dollar despite positive results.
- Fed chief worries about uneven economic recovery
- Markets started the month strongly
The forex market for the dollar started the week strong and continued its upward trend in early trading today. This is despite more positive data and a shift in the EU towards vaccination, and the UK is also on track. The dollar picked up thanks to a strong earnings season, but Fed Chairman Jerome Powell warned of a potentially uneven economic recovery. This did not dampen the markets’ enthusiasm at the beginning of the week. In particular, the Dow Jones continued to rise yesterday as traders remained optimistic.
Pound and euro lose ground
Those who trade both EUR and Pound on the currency market felt the return of the safe-haven Dollar earlier this week. With the US Dollar Index also trading above 91, the momentum is clear. This is despite largely positive developments for both the EU and the UK, which would have strengthened their position at other times.
In Europe, more and more countries are easing restrictions on COVID-19, as even international traffic within the planned distribution zones between the block countries is reopened and the vaccines are now more widely available. The currency fell to 1.20 and sterling also dropped below 1.40 against the dollar, not helped by continued pressure on policy rates.
Powell shakes the boat with comments on‘s recovery
The Federal Reserve’s support for the economic recovery so far remains unwavering. They have never wavered on issues such as inflation and have always taken an unequivocally positive stance. The first hesitation in this position seems to have come this week from Jerome Powell.
His comment that while the economic recovery has been strong, it has been slower for people in low-paying jobs was seen by many as evidence that the recovery has been uneven. This is a major factor that has led many currency traders to quickly return to the safety of the dollar. Whether this is a change in tone or just overzealous bidding on a slow day for important data remains to be seen.
Good start for equity market
The month of May largely continued the current trend on Wall Street, with the Dow Jones in particular showing positive movement yesterday. Trading began quietly today as the market continued to digest Warren Buffett’s strong comments about cryptocurrencies and trading in Robinhood in particular.
However, the NASDAQ has pulled back a bit this week: Tesla continues to lag after it reported lower-than-expected earnings and buyers took a break on the stock, while tech stocks led the losses today, with the index trading more than 1% lower at the time of writing.
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