The euro continues to consolidate, under pressure from certain that the ECB will leave its policy stimulus gradually.
It is growing nervousness among investors before the Fed meeting in March.
Trump continues remodeled his government. And investors do not like. Following the resignation of economic adviser to US President Gary Cohn, and dismissal of the Secretary of State, Rex Tillerson, Donald Trump has decided to replace his national security adviser, Herbert McMaster, according to the Washington Post. And the ‘dollar’ falls against yen to new lows of more than two weeks at 105.65 yen.
Investors have embarked on a new wave of selling of the US currency against the Japanese currency, which puts into play its role as a safe haven once again. The ‘reforms’ of the Republican sow market concerns about the impact they may have on their policies. Moreover, “are perceived as Trump is surrounding himself with a team that will provide pursue their protectionist measures,” say analysts at Mizuho.
The yen, meanwhile, advancing 0.8% against its US rival, after earlier days was appreciated after the political scandal surrounding Prime Minister Shinzo Abe and threatens its expansionary economic policies in the week. The Japanese currency at 130.41 units is changed against the euro, a rise of almost 0.4%.
But the news of the ‘dancing chairs’ in Trump is not the only administration that hangs over the dollar. Still Republican, reports that Robert Mueller, the special prosecutor investigating the role of Russia in the presidential election won Trump, Trump has asked the Organization documentation related to Russia, also kept investors on guard. Finally, trade war, this time with China, still remains on the radar operators and will remain an issue for markets in the coming weeks.
THE FED, A SCENE
Instead, against other rivals, the dollar has managed to sustain its recent gains as the monetary policy decision of the Federal Reserve (Fed) next week is at the center stage of the forex market. Thus, the index that measures its performance against six rival currencies ceases remains unchanged, slightly above 90.00 points, after rising 0.5% Thursday.
Stephen Innes, an analyst at Oanda, the rise of the dollar must be “marked to the indecision of the operators position themselves when the Fed”. In fact, the first appearance of the new president of the central bank, Jerome Powell, is considered one of the landmarks of monetary policy more weight this year because “it will dictate the course of the entity for the remainder of 2018 and beyond” he says Innes.
Oanda analyst also highlights “the growing anxiety of operators to an event risk”, so believes that “uncertainty intensify as we approach the event.”
The euro, meanwhile, continues to consolidate recent moves at $ 1.23, while from the point of view of technical analysis faces major resistance. Prudence which again made gala the president of the European Central Bank (ECB), Mario Draghi, has challenged the high band channel short term in which it is framed the euro / dollar.
Last Wednesday, he again reiterated the message he gave at the ECB meeting March referring to the outlook for inflation as positive, but point out that rates will not approach the target of 2% until after 2020. Innes expected see the crossing is governed by the “growing nervousness about the market guide that can give the Fed”.