FINAM FOREX: Dollar continues to weaken after the publication of the minutes of the Fed meeting


08 April 2021

Andrey Maslov, analyst, FINAM Group

On Thursday, April 8, EUR / USD remains close to yesterday’s close, gaining 0.05% and trading at 1.1875. The DXY dollar index is down 0.07% at 92.34. The US currency continues to fall amid falling Treasury yields, after the March Fed meeting minutes confirmed that there was no disagreement in the Fed leadership at that time about the advisability of keeping monetary stimulus at the same level for now, despite improved economic forecasts.

The Fed remained wary of the risks posed by the coronavirus pandemic, even as the US economic recovery picks up steam, and was determined to maintain a looser monetary policy until the recovery was safer, the minutes of the meeting showed. Still, high rates of vaccination in the US and fiscal stimulus to the economy gave the Fed hope for an accelerated economic recovery.

The dollar’s gain in the previous quarter was based on investor hopes that accelerating economic growth and inflation in the US could force Fed governors to abandon their forecast that the Fed will keep interest rates close to zero until 2024.

The yield on the 10-year Treasury bond was around 1.66% after falling below 1.63% overnight. Recall that at the end of last month it reached more than a year high of 1.776%.

As for the Old World, progress in vaccination in Europe lags far behind that in the United States, and the rate of spread of coronavirus is growing again amid a lack of drugs and some public mistrust of vaccines.

As for macroeconomic statistics, yesterday the US posted a trade surplus for February of $ -71.1 billion, which was lower than both the results for the previous period of $ -67.8 billion and analysts’ forecasts of $ -70.5 billion

Today we should follow the publication in Germany of data on the index of business activity in the construction sector for March, as well as data on the volume of factory orders for February.

Later in the eurozone will be published a report on the monetary policy of the ECB.

In the US, the data on the initial applications for unemployment benefits for the week will become known.

In addition, today Fed Chairman Jerome Powell will speak at a virtual conference of the International Monetary Fund.

The EUR / USD rate continues to rise after breaking through the resistance level at 1.1800 and is trading at the level of 1.1876. Stochastic lines are heading towards the overbought zone, which still indicates a favorable buy situation in the short term. The nearest resistance is at 1.1900.

This information is not investment advice.

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