Dollar Faces Win-Win Situation Amid Good Data and Safe-Haven Status

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Forex Trading

: 31 January 2014

The dollar appears to have found itself in a win-win situation against the euro.

It either gains on good US economic data, which is better than Europe's, or benefits from the flight to safety, where the dollar is often the currency of choice.

Also, if funds are returning from troubled emerging economies, it seems likely that much of it will flow into the dollar.

As a result, the EUR/USD pair plunged 107 points to $1.3554, with inflation in Germany remaining unchanged during January.



Forex Trading

: 30 January 2014

The Fed's second round of tapering seemed to be a non-event for the euro against the dollar yesterday, with tight swings around the $1.3660 mark.

Investors' focus was elsewhere, primarily on emerging economies like Turkey and South Africa, who aggressively raised rates in an attempt to prevent an accelerated plunge of their currencies.



Forex Trading

: 29 January 2014

The shared currency had another quiet session against the dollar yesterday as participants chose to wait on the sidelines for the Fed to conclude its two day meeting.

In the meantime, after a few dreadful years for European banks, there is now growing consensus that they are getting closer to a turning point, which should support the financial sector.



Forex Trading

: 28 January 2014

Business confidence in Germany managed to beat estimates by rising to the strongest level in two years, fuelling speculation that Europe's biggest economy will see improving growth.

However, the effect on the common currency was rather non-existent, with the EUR/USD pair remaining flat at $1.3675, as FX investors waited for today's FOMC meeting.



Forex Trading

: 27 January 2014

European Central Bank President Mario Draghi said that he sees 'a dramatic' improvement ahead for the Eurozone economy, with no immediate danger of deflation.

However, investors were probably paying more attention to events on the other side of the Atlantic, where equities were nose-diving.

In addition, currencies in the emerging economies tumbled sharply, triggering a shift in investor sentiment across the board.

This meant that traders decided to stay in risk-off mode, with the EUR/USD pair closing 19 points down at $1.3675.


By Jonathan Sudaria, 31 January 2014


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