Greenback Eases Back from Four and a Half Month High

The U.S. dollar index which was seen at a four-month high last week declined during the beginning of the week due to market hopes of an interest rate hike being announced by the U.S. Federal Reserve four times this year due to a weak April U.S. consumer price data.

While the greenback recovered slightly during the trading session on Tuesday in Asia, the currency was still trading mostly lower against major currencies with the USD gaining 0.08% against the Japanese yen in market anticipation of its GDP data to be released on Wednesday as well as its CPI data to be released later this Friday. The dollar also traded higher against the Chinese yen by 0.12%.

Despite the weaker outlook of interest rate hikes from the U.S. Federal Reserve, some traders have remained mostly positive due to a number of upbeat economic data from other countries.

U.S. Dollar Movement

Following a rally in crude oil prices during the first couple weeks of February, the U.S. dollar slipped to a three-day low in less than a full trading session with the dollar index losing 0.2% against six other currencies and was already on track to slip down by 2% more during the week which was the currency’s biggest decline during February.

While the dollar was trading mostly steady close to its third weekly consecutive gain in March, the dollar slipped due to an unexpected decline in U.S. retail sales for the month of February which offset a higher than expected domestic producer prices during the previous month.

Despite trading mostly flat back in February until March, the greenback started to climb to as much as a seven-week high as the U.S. 10-year bond yield added 3% renewing overall market outlook. This was due to market anticipations of rate announcements from the European Central Bank as well as the Bank of Japan which has pushed the US dollar higher. During the same week, the USD was seen at a two-month high against the Japanese yen.

At the beginning of May, the US dollar which was trading at its 2018 highs or at a four-week high traded down more than a week after due to a softer US inflation report that pushed the U.S. dollar index down. The dollar also slipped over the past week due to US President Donald Trump’s decision to pull of a deal with Iran that lifts off heavy sanctions against the country in exchange for lesser nuclear activity.

The U.S. dollar index was seen down by as much as 0.28% at 82.18 during the most recent trading session on Monday after being seen at a four and a half month high of 93.26 during Wednesday’s trading session last week. While some analysts have doubted the U.S. dollar being able to recovery or its potential rally. Some have stated that the tightening labor market as well as the recent rise in the prices of commodities may have led to the dollar’s reversal.

See also: U.S. Dollar Increases Against Yen

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