Dollar Loses 4th Straight Week vs. Euro
The U.S. dollar has lost a fourth straight week against the European currency (and against the pound and the yen as well) as the whole week was filled with the bad economic news from the United States.
The Friday’s unexpected drop in the non-farm payrolls brought the dollar to a new historical minimum against the euro — at 1.5454 euro/dollar. Surprisingly enough, it was the only day during this week, when the dollar closed higher than the day’s opening price.
The whole dollar anti-rally that can be observed on Forex since the 8th of February is based on the market expectations of the interest rate cut by the Federal Reserve. After the panic cut on the 21st of January and the scheduled cut by 50 basis points on the 30th of January, FOMC is expected to decrease the rates again in March, this time 50 basis points will probably not appear enough.
As the U.S. economy is slowly sinking into the recession, the country’s currency can’t perform well against the other world currencies, that are less touched by the crisis. But if the European Central Bank decides to start cutting interest rates too, it may reverse the current trend on EUR/USD and make the dollar appreciate for some time at least.
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The dollar ended this week on Forex at 1.5356 against the euro; USD/JPY closed at 102.67, while GBP/USD broke through the important barrier at 2.0000 and closed at 2.0134 on Friday.
