Over the past to trading days, the US Dollar eased quite significantly. Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, sees a good chance that the USD correction will last.
The previous USD strength is now regarded as excessive
The previous USD strength is now regarded as excessive because the US monetary policy appears not as exceptional as the USD bulls had previously expected after all. I therefore assume that the USD weakness seen since Wednesday evening was not just a Thanksgiving special effect, but the continuation of the dominant subject.
We expect a period of economic weakness in the US medium-term. To an extent that will likely deserve the label ‘recession’. I am therefore principally pessimistic about the US data. And even secondary data could support a USD-negative view. Also, from the point of view of the traders who return from their Thanksgiving break. They would then be more inclined to jump onto the bandwagon they missed as a result of all the turkey eating.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD bounces from daily lows, returns to comfort zone around 1.0750
EUR/USD bounced amid broad US Dollar weakness following the release of US employment-related data. Initial Jobless Claims unexpectedly surged in the first week of May, undermining demand for the American currency.
GBP/USD recaptures 1.2500 post-BOE as USD turns south
GBP/USD fell towards 1.2440 as the Bank of England left monetary policy unchanged, pointing to delayed yet potentially steeper rate cuts. The pair bounced nicely in the American session as an improving mood undermines demand for the US Dollar.
Gold stable just above $2,300 ahead of a fresh catalyst
Gold price remains little changed for a fourth consecutive day on Thursday, trading just above the $2,300 mark. The soft performance of global equities keeps the bright metal afloat as investors hope for directional clues.
Solana meme coins TREMP, BODEN rise after Donald Trump’s pro-crypto stance
Solana-based meme coins TREMP and BODEN post nearly 125% and 7% gains on Thursday. Former US President Donald Trump says his campaign will likely accept crypto donations.
Bank of England inches one step closer to a summer rate cut
The Bank of England is undoubtedly turning more optimistic, but it’s keeping its options open amid some uncertainty surrounding the near-term inflation numbers. We still narrowly expect the first rate cut in August.