Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Dollar Subdued Despite Risk-Off Trends

Published 05/19/2022, 09:36 AM
Updated 07/09/2023, 06:31 AM

After a short-lived pause, the dollar is back under pressure on Thursday, threatening fresh local lows during the European hours. The greenback remains the laggard even as risk aversion intensifies across the financial markets amid persistent inflation concerns.

During the recent bounce, the USD index failed around 104.00 and slipped to two-week lows, bringing the market focus back to the 103.00 mark. In part, the dollar’s appeal was further dented by the resurgent demand for the euro after the accounts of the ECB's policy meeting showed that members expressed concerns over high inflation numbers. At that, some members highlighted the importance of acting without undue delay in order to achieve price stability.

The key driver behind the euro’s jump was report that the majority of ECB policymakers are said to be prepared to back at least two 25 bps rate hikes this year (some are leaving the option open for three hikes). Against this backdrop, EUR/USD advanced to the 1.0550 zone that seems to be capping more robust gains, suggesting the euro’s upside potential remains limited despite a more hawkish tone by the ECB.

In a wider picture, the ongoing retreat in the buck looks like a bearish correction from multi-year highs at this stage. The overall uptrend remains intact, especially as the Fed continues to outperform other central banks in tightening while the USD’s safe-haven status keeps it afloat in turbulent times that will persist in the longer term as well. Still, the dollar index could challenge the 103.00 figure to probe May’s lows around 102.35 on a short-term horizon. 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.