The US dollar tumbled last week due to the unexpectedly dovish comments of the Federal Reserve, though the currency has started to recover by the weekend. What can traders expect from the greenback this week?
This trading week is relatively light on economic data. The most important economic release should be the final revision of US gross domestic product for the fourth quarter. Yet the report will be released on Friday, meaning that it will not have influence on the currency throughout the week. With absence of other major indicators, the greenback is likely to be driven by the previous events and short-term shifts in the market sentiment unless some big surprise occurs.
With the relatively dovish stance of the Fed, it is not unreasonable to believe that the dollar is going to demonstrate weakness. Indeed, DailyFX issued a bearish forecast for the US currency.
On the other hand, the dollar has rebounded, and it is not unlikely that the currency will not move far over the week, attempting to find direction and establish a new trend. Consequently, Forex Crunch predicted that the greenback will be neutral against some currencies (and even bullish against others).
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