The dollar has exploded higher. Since overtaking the 10,600-mark – the midpoint of the past decade’s range – the Dow Jones FXCM Dollar Index (ticker = USDollar) has posted its biggest two-week rally since November 2011. Momentum of this scale is all the more impressive because the benchmark is winning fresh three-year highs with each drive forward.
The Euro was actually quite strong this week, with traders finding solace in the single currency amidst the liquidation of the Australian and New Zealand Dollars. But the real question is: does the Euro have what it takes to rebound against the resurgent US Dollar?
The Japanese Yen tumbled for the third-straight trading week (and sixth week of the past seven) against the US Dollar, breaking the psychologically significant ¥103 mark with seemingly no end in sight. But key warning signs suggest the JPY-short trade is becoming a little too obvious for comfort.
The British Pound failed to maintain the upward trend from earlier this year, with the GBPUSD slipping to a fresh monthly low of 1.5156, but the sterling may regain its footing in the week ahead should the Bank of England (BoE) Minutes further dampen speculation for more quantitative easing.
Expectations that the Federal Reserve will start to taper its asset purchases have continued to weigh on gold prices as a growing number of central bank officials adopt a more neutral tone on monetary policy.
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