Analysis of the past week

The past week was full of news and statements, which corresponded to a high level of market volatility. The US Treasury Secretary Mnuchin spoke out for the fact that a weak US dollar is beneficial to the US economy. After that, a general sale of the American currency followed, and as a result, the US dollar index updated the three-year lows. In addition to verbal intervention, pressure on the dollar was provided by fundamental and technical factors.

Also, the ECB protocol was published during this week and the euro received support. At the same time, the euro movement was very weak, and only because M. Draghi was more hawkish in his comments. The significant weakness of the euro is expressed by the dynamics of the single currency against the dollar and the yen. So, the euro noticeably weakened because of the comments of the US President D. Trump that the market misread the statement of the US Treasury Secretary and the government benefits from a strong dollar. The second sign of weakness was a more pronounced decline in the euro against the yen based on the comments of the head of the Bank of Japan about economic growth, which confirms the overbought of the euro against major competitors.

So, the last week turned out to be full of statements and strongly politicized. It manifested itself in variously directed fluctuations in the market. At the same time, Trump’s comments on a strong dollar can strengthen the correction of the US dollar or at least cause the formation of a flat.

Graph of the US dollar index. The current price is 88.80.

Hanzenko Anton