US Dollar Rallies over Week, Loses Gains vs. Euro by Weekend

The US dollar was performing well for the most part of the trading week thanks to the monetary policy outlook and the speech of US President Donald Trump. The greenback retreated a bit versus its rivals on Friday, though against the euro it dropped sharply, losing all weekly gains.

The major positive factor contributing to the dollar’s strength were expectations of an interest rate hike from the Federal Reserve. Comments from various Fed officials led traders to believe that it may happen as soon as March. Currently, CME Fed Watch tool shows almost 80% probability of March hike, which is a sharp increase from the previous week’s figures that were in the neighborhood of 30%. Trump’s speech, which was the source of investors’ concerns in the previous week, was surprisingly well-received by markets, and that was also helping the dollar.

The greenback was performing against the euro worse than against other currencies due to easing concerns about the French political elections. Polls showed that far-right anti-EU candidate Marine Le Pen has lower support than Emmanuel Macron, who is more favored by markets.

EUR/USD was down from 1.0562 to 1.0494 during the week but bounced to close at 1.0617. GBP/USD declined from 1.2471 to 1.2286. USD/JPY jumped 1.6% from 112.13 to 113.89.

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