Where To From Here For The USD?

The world’s reserve currency has made a 360° turn by going from hated, to loved and back to hate again, all in a matter of a few weeks, and all with good reason. The big question right now is where to from here for the US Dollar?
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The recent push lower in the DXY, especially the last two weeks, has been driven by expectations of a faster economic recovery. Not only in the US, but also in other places like Europe where the ECB announced a bigger-than-expected increase to their pandemic QE program.

Until recently, the hopes of a speedy economic recovery have been limited to stock markets. But recent positive developments in the Oil and Bond markets are pointing to broader global macro markets joining the risk-on party.

The Dollar did see some minor reprieve on Friday with one of the biggest NFP surprises in history. While economist and analyst consensus expected a print of -8 million, the US added 2.5 million jobs in May. To put this into perspective, the very best expectations from a whole range of analysts were looking for a contraction of -800K.

Has this changed the outlook for the US Dollar? Well, it’s not a binary answer because there are lots of moving parts in motion for the DXY right now. Apart from the recovery story, we also need to consider the FED and the Euro as well.

This week ahead video will help you prepare for this week’s upcoming events and provide insights into how you could possibly trade it as well.

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Highlights of the video:

00:35 – Current Baseline

05:26 – Baseline expectations for the upcoming risk event

09:39 – Possible sentiment shifts

12:21 – Possible currency pairs to consider

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