The DXY, which is a standard measure of the $US, has been
staying on the 100 mark for about two years. The FED changed its course of low
interest rates and quantitative easing and the pattern of appreciation has stopped.
The FED has introduced the next step of their economic plan which is to
increase interest rates and getting rid of the mortgage loans they bought
because of the 2008 financial crisis. An increase in interest rates usually
appreciates the currency, but is not 100% or happening this time. Also, .25
increases from the FED still very low increments from normal standards before
the 2008 crisis. With future expectation of more interest rates hike there is a
high probability for the DXY to stay around the 100 mark.
The EURUSD has shown some technical resistance above the 1.0
mark. Fundamentals still point for the EURUSD to keep depreciating, but since
the beginning of 2017 it hasn’t done it. Now the pair looks like it could break
to the upside. If EURUSD appreciates with the FED increasing interest rates,
there is a high probability the EURUSD will continue to appreciate. The ECB
also has negative interest rates and they will increase in the future which
supports the idea of an appreciation of EURUSD.
The next FED meeting is in the middle of June. On May 24 the
FED would release their minutes and that would be a window on what the FED are
planning to in the coming up months. This would also be a confirmation on
whether the down patter would continue or a floor has been established.
