The most important event this week is the release of the Minutes from January’s European Central Bank meeting on Thursday. Remember, it was the release of the December minutes on Jan. 11 that sent the euro on a two-day run of 1.8%...
The U.S. dollar depreciated across the board versus major pairs despite consumer prices rising more than expected. Inflation anxiety had triggered a sell-off in global stock markets with the Fed expected to ramp up their interest rate hike path yet the dollar did not benefit as higher rates have already been priced in by the market.
The euro has been on a path higher since yesterday morning and we believe much of this is technical. Where the dollar was vastly oversold, the euro was overbought, and the trade was due to come back in.
In a quiet currency session ahead of a busy week of data, the euro grinded higher since bottoming early this morning. The U.S. Federal Budget Balance came in a little lighter than expected and this put pressure on the dollar late in the session. Today was a very quiet inside session for the yen ahead of PPI data tonight at 5:50 p.m. Central.
The U.S. dollar had its strongest week against major currency pairs in 12 months. Even as the United States is suffering a bout of political uncertainty, the dollar became a safe haven as stocks and bonds saw massive moves this week. The signing of a federal budget by U.S. President Donald Trump boosted the dollar ahead of the release of retail sales and inflation data next week. Central banks are moving away from record low interest rates around the globe.