Optimism has returned to the financial markets today, and that has resulted in a lower US dollar on the Forex market. Forex traders are feeling better about the situation around the world and, as a result, are turning to high beta currencies with better yields.
For now, low yielding currencies like the US dollar and the Japanese yen are out of favor as Forex traders look for other options. Optimism about a recovery US economy is leading to a lower dollar, pushing the euro above the 1.31 mark.
Additionally, euro is getting help from developments in the eurozone. German confidence, as measured by the Ifo, received a boost, and the latest Spanish debt option has been considered a success. There aren’t nearly as many rumors about a break up of the euro, and that is providing strength for the 17-nation currency — and sending the dollar lower.
For now, it appears that good news is outweighing the bad, and Forex traders are ready to celebrate a little by selling dollars in favor of other currencies. It’s important to realize, though, that the story could change at any moment. There is still high volatility in the financial markets, including the Forex market, and the first sign of bad news could send traders back to the dollar in droves.
At 15:30 GMT EUR/USD is higher at 1.3118, up from the open at 1.2996. GBP/USD is also higher at 1.5688, up from the open at 1.5499. USD/JPY is lower at 77.7710, down from the open at 78.0450.
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