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US Dollar Price Action: Is The US Dollar Peaking?


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Jun 21, 2022 | DailyFX
Justin McQueen, Strategist

USD, GBP ANALYSIS AND TALKING POINTS

  • USD Peaking?
  • Tighter Bond Spreads to Pressure the US Dollar
  • USD Peaking?

After a subdued start to the week following yesterday’s US holiday, the USD is softer across the board this morning, dipping below the 104 as the Euro bounces back from the 1.05 handle, while GBP breaches 1.23. Now while the USD will benefit from safe-haven flows, with equities beginning to stabilise there is a risk that the USD can continue to drift lower as factors that have underpinned the greenback are beginning to ease.

Following last week’s surprise hike from the SNB, I believe we are starting to shift from monetary policy divergence, which had been a supportive factor for the US Dollar to monetary policy convergence. Aside from the SNB, the ECB will raise rates from next month, while also looking to announce an anti-fragmentation tool. Elsewhere, the RBA, RBNZ and BoC have moved aggressively, meanwhile, the Bank of England have signaled their willingness to act more forcefully (despite their tepid action). The view of monetary policy covergence weighing on the greenback would be even more apparent if the BoJ broke away from its ultra-loose policy and while we aren’t there yet, Japanese Officials have signaled their unease at the rapid depreciation in the Japanese Yen.

For more on this article: US Dollar Price Action: Is The US Dollar Peaking?

US Dollar Price Action: Is The US Dollar Peaking?

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