Weekly Currency Outlook Of 20-03-2021 By Swastika Investmart
FUNDAMENTALS OF CURRENCY:
* The U.S. dollar gave up early gains on Friday as Treasury yields dipped from near 14-month highs, while investors digested the Federal Reserve's pushback against expectations of any early interest-rate hikes.The dollar index was down about 0.1% at 91.689 after rising as much as 0.2% in early Asian trading. The Federal Open Market Committee (FOMC) pledged this week to press on with aggressive monetary stimulus, saying a near-term spike in inflation would prove temporary amid projections for the strongest U.S economic growth in nearly 40 years.
* Currency pairs kept surfing yields’ waves, and the greenback was the overall winner. The EUR/USD pair is trading around the 1.1900 threshold, posting its worst weekly close for the year. Mounting speculation about an economic comeback and the subsequent higher inflation is behind the run in government debt rates. Simultaneously, the rally puts pressure on borrowing costs, which may delay the economic recovery. The ECB announced it would ramp up bond-buying to tackle surging yields in the previous week. The Fed and the ECB announcements had one thing in common. Both were good enough to cool yields, but only for a short span of time.
* Little time for partying – St. Patrick's Day has resulted in a short-lived upswing in cable in response to the Fed, with a quick hangover. US yields remain in the spotlight for markets and they are set to be influenced by new US stimulus, final GDP and other data. In the UK, a vaccination slowdown, jobs, inflation and retail sales figures are of interest. While sterling retreated from the highs, it held onto most of its gains.
Technical indicators (Daily):
* RSI- 42.0246
* MACD- -0.1034
* MOVING AVERAGES (20,50,100)- (72.8119/72.8816/73.3597)
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