Fundamental Forecast for Dollar:Neutral
- An active or expectd dovish shift from the ECB, PBoC and BoJ leverage the Dollar’s remarkably monetary policy bearing
- Depending on whether the Fed maintains course, abandons a 2015 hike view or pulls the trigger; the impact will be wide
- Find help with your trades and trading strategy from DailyFX analysts with DailyFX on Demand
The Dollar posted its best week performance in five months with this past Friday’s close. The rally was derived less from the currency’s own fundamental improvement rather than slump amongst its major counterparts. As we frequently experience, the FX market is one of relative strength. If the entire field of currencies is sliding into a fundamentally adverse situation – in this case dovish – then all the outperformer needs to do is to hold its bearing. While the Greenback rose on the backs of its most liquid alternatives, that indirect leverage would struggle to keep momentum, especially with the 12-year highs in site. Yet, we may find the next move is decisive and made with US event risk as the Fed prepares to wade back into monetary policy. And, volatility does not have to fall in currency’s favor.