The dollar index, which is evaluating the USD value against a basket of 6 other major currencies, is still rallying actively. All in all, the USD index managed to gain 4,4% in September. This happened mainly at the expense of the common European currency, which accounts for the lion’s share of the index – some 50%. Apparently, the common European currency keeps on losing value amid disappointing economic figures coming from the Eurozone. At the same time, most traders and investors are anticipating another round of quantitative easing by the ECB in an effort to back the economic recovery in Europe, which is definitely going to exert some downward pressure on the common currency amid the fact that the Fed is about to taper QE3 to the end this month.
EUR
Yesterday, on September 30th, the Eurozone published another inflation report, which signaled another inflation slowdown. Consumer prices increased only by 0.3% in September, which is the weakest gain since October 2009. At the same time, the rate of unemployment is still rather high – 11,5%.
Judging by the fundamentals, we can see that the Eurozone economy is slowing down, the lending is weak, the rate of unemployment is high and stable, which is definitely pressing the currency of the Eurozone, thereby pushing the SU Dollar to new highs, especially as financial markets are waiting for the ECB to add to the current stimuli. More currency strategists anticipate a drop down to 1,10 in 2015.
JPY
The Japanese Yen is contributing to the overall strengthening of the US Dollar as well since it is also included in the basket of currencies the USD index is based on. The Japanese economy is stagnating and will definitely need much more time to recover from the recent sales tax hike undermining it. At the same time, the rate of inflation is well below the target set by the BOJ and still slowing down. 1,3% in July, 1,1% in August… So, the Japanese monetary policy y is focused on reaching the 2,0% inflation target in 2015.
Strategists anticipate a rally up to 111,00 by USDJPY with a couple of weeks.
GBP
The British Pound is also going down in value against the US Dollar despite strong British fundamentals. On top of that, the UK economy is at the highest pace of recovery among G7 economies. So, the weakness of the Great Britain’s national currency is probably temporary.
According to the Option Trading Department of Masterforex-V Academy, one of the leading experts in financial markets on the web, the US Dollar is likely to continue its way up to new highs against other majors. Still, the pace of growth may slow down a bit. While the Euro is losing value, the European export may boost.
This week will also bring us the results of the ECB meeting and new Non-Farm Payrolls. These events may cause higher volatility in financial markets, including Forex. Depending on the data, the rally may be continued or suspended.
The team of the Option Trading Department of Masterforex-V Academy can benefit from the existing market situation by selling call options on currency futures after the Euro, the Aussie and the Japanese Yen have initiated a bullish reaction. After the downtrend in the market of GBPUSD is completed, the trading experts from Masterforex-V Academy are probably going to sell put options on GBP futures.
