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Dollar may yet regain strength
Forex
09/07/2018

Dollar may yet regain strength

The greenback declined dramatically against the yen overnight and remains unattractive for buyers on Friday. There is no obvious risk aversion so fat in the global financial markets,

The greenback declined dramatically against the yen overnight and remains unattractive for buyers on Friday. There is no obvious risk aversion so fat in the global financial markets, but investors are obviously cautious as the new Trump’s tariffs on China are looming as well as another trade war, this time with Japan.

So the risk-off sentiment could reemerge at any moment, with the buck may benefit from market turmoil along with the yen as safe-haven currencies. And as long as Trump’s protectionism keeps global investors on their toes, dollar’s downside potential will be limited. As there are no signs of easing tensions between the US and its trading partners, this factor could serve as a safety cushion for the dollar at this stage.

In the short term however the USD dynamics will depend on the economic signals. For the greenback to regain its previous strength, the NFP employment data, including wages, should surprise to the upside. Otherwise, the USDJPY will threaten the 110.00 figure, while EURUSD will break above the 1.1650-1.1660 area, to 1.17.

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