USD Weakens Across The Board As EUR Gains Ground
High Volatility Hits the Currency Markets
In an about turn, the USD has suddenly come under increasing pressure on the global financial markets. For well over a year, the U.S. currency has been coasting along and putting pressure on the currencies of developed economies and developing economies alike. Just recently, the euro gained ground against the greenback as fears of U.S. bond market weakness permeated the markets. That the greenback has been leading the way in the forex arena since 2014 is not lost on traders who have been placing call options on the USD and put options on the EUR on their preferred binary options platform.
The recent changes to the asset markets have seen lengthier US Treasury yield moving higher. And while this should be of great benefit to the greenback it has had the opposite effect. With regards to the AUD, positive housing data in Australia has boosted the currency while the yields on the German Bund have also spiked recently. By the time all the facts and figures were correlated, the U.S. Dollar Index dropped by as much as 0.63%. The Dollar Index Spot Exchange Rate (DXY) dropped to 94.4140 by Tuesday 12th May, from a 1-year high of over 100.3300 in March 2015.
The U.S. Dollar Index Reflects Trader Sentiment
While the U.S. Dollar Index slipped by over 0.6%, the euro rose by that much. The euro was last trading at 1.12312 to the dollar – marking a full month of recovery since the EUR bottomed out against the USD on the 13th April 2015. The EUR traded in a tight range in January and February of 2015, but plummeted in March as euro weakness was exposed and fears of a Brexit and Grexit came to pass. The European Union has been dealing with sensitive negotiations with Greece in particular, regarding the debt relief and austerity measures needed to be implemented to satisfy IMF and EU concerns. These issues, in addition to weak economic considerations have placed pressure on the euro in recent months.
Since then however, a mini-recovery was staged and the European currency managed to claw its way back from 1.05000 to its present value of 1.12379 to the USD. For binary options traders, the volatility in the forex markets of late is a positive thing. Now that the euro is rallying relative to the USD and other major currencies, the volume of call options is strongly driving sentiment. The best binary options platform is one which allows traders to evaluate market movements of multiple related assets and currency pairs. An economic calendar provides updated data as to which announcements will likely impact on the relative strength of currencies et al.
The Long-Term Prognosis
While the financial waters remain murky in the short term, there is an air of optimism that stability will return to the markets in coming months. The Greeks make a payment on a €750 million loan that was due to the IMF (International Monetary Fund) on Tuesday 12th May 2015. This payment marks the biggest such payment made by Greece for the 2010 bailout that was issued to the country. In England, the Bank of England (BoE) placed its monetary policy on the backburner after it held a 2-day meeting. For the time being, the interest rate in the U.K. will remain at 0.50% – the rate it has been at since 2009.Presently, investors are waiting on inflation and growth figures from the upcoming inflation report.
Many financial analysts and currency traders are of the opinion that the euro will move lower in the long-term, based broadly on the fundamentals of the USD and ongoing euro weakness. In much the same fashion, the USD dropped against the JPY, but the marginal drop was well within a tight trading range. Based on these factors, the dollar will remain the trader’s choice say analysts trading on credible binary options platform, albeit with volatility in the upcoming weeks. Traders will be looking towards economic calendars for high importance events that will impact on tradable assets.