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FUNDAMENTALS OF CURRENCY:

* The dollar index bottomed around the 91 level on Friday, recording its third weekly loss amid signs of diminished enthusiasm on the US reflation trade and a soft note in Treasury yields. A slew of economic data, including better-than-expected US preliminary PMI readings and new home sales, reinforced the view that 2021 could see the best economic growth in nearly four decades. Given the above and the fact that the Federal Reserve will keep monetary policy extremely easy for the foreseeable future despite an apparent increase in price pressures, it seems unlikely that the greenback will attract fresh buying. 

* A stronger-than-expected bounce in UK retail sales helped to push the Pound to US Dollar (GBP/USD) exchange rate higher this morning. As sales surged 7.2% on the year in March this offered Pound Sterling (GBP) a boost, as confidence in the health of the sector improved. Doubts over the strength of the global economic outlook may also help to boost the US Dollar across the board, with any increase in safe-haven demand set to push the GBP/USD exchange rate lower.

* Even though the safe haven JPY is the worstperforming G10 currency in the year to date, it is the best performer on a 5-day view as Covid related news in the Asian region destabilizes risk appetite. Last month’s monetary policy review has provided the BoJ will a little more flexibility on its activities. There would appear to be little risk that policymakers will not continue to pursue ultra-accommodative policy measures for the foreseeable future. 

Technical indicators (Daily):

* RSI-  61.5005

* MACD-  0.5662

* MOVING AVERAGES (20,50,100)- (74.3333/73.3821/73.3139) 

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