Fundamental Outlook for US Dollar

The US Dollar finished the week almost exactly where it began, confounding traders with volatile short-term moves yet remaining nearly unchanged. Similarly choppy price action in the S&P 500 underlined financial markets’ indecision and gave few clues on future short-term direction. It seems that financial markets have reached somewhat of an impasse. On the one hand, months and months of stock market advances leave more medium-term momentum to the topside. On the other, the S&P 500 and other major induces remain in a clear bear market and risk further losses following a fairly long period of appreciation. Determining which scenario is most likely is critical to establishing a clear trading bias for the US Dollar. As one of the lowest-yielding major world currencies, the Greenback often falls victim to speculative selling as traders buy higher-yielding currencies. Yet strong bouts of financial market risk aversion most often force substantive US Dollar rallies, and it remains critical to watch risk trends through short-term trading.


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