U.S. Dollar Weakens Against Major Currencies

By: LiveCharts

The euro, pound and yen are among major currencies that have taken advantage of a weaker dollar again this week. The dollar, already sluggish in lieu of ongoing unemployment concerns, slid further following the Fed’s announcement last week that it plans to buy US Treasuries to effectively infuse cash into the economy.

The euro continues its remarkable run with a current spot rate of $1.3627 early Wednesday (September 29) morning. The European Union’s currency has climbed about 10 pips in just three weeks after sitting in the $1.26-1.29 range for a month.

In a little over three months, the EUR-USD currency pair is up around 18 pips after a 2010 low point of $1.1876 in early June. Technical analysts believe the pair is overbought in its current state after it easily cleared the 50.0 per cent Fibonacci retracement represented by the 2009 high point and the 2010 low.

Britain’s pound has been more range-bound against the greenback, but it is also moving higher with a current rate of $1.5788. Early Wednesday New York trade pushed the pound as high as $1.5878 before a modest pullback.

Despite positive data showing increased mortgage interest, the Bank of England believes the economic fundamentals in Britain remain weak. This suggests that the Bank could be considering an easing of monetary policy in the near future. This parallels similar potential in the US and could reduce upward mobility for the pound.

One dollar is worth 83.63 Japanese yen. Speculators appear to be rebuking the intervention by the Bank of Japan last week to slow its currency’s growth in light of strong economic improvement in the country. The dollar fell to a 15 year low against the yen at 82.97 early last week ahead of the maneuver.

It appears as though a retest of the 83 level is in store for sometime Wednesday or later in the week if support prevails.

Dollar weakness is the major theme among global currencies. Country’s, like Japan, with stronger economic indicators are flourishing against the buck. Meanwhile, those in a more similar position, like Britain, have currencies that are holding their own or improving slightly against the buck. 

Neil Kokemuller

LiveCharts.co.uk

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University. He is also in house stock market commentator at Live Charts UK, where you can find real time charts and share prices .

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