The US dollar was, along with crude oil, the biggest ‘casualty’ of President Trump’s ‘peace dividend’. The idea that the US military could be out of the Middle East in the next two-to-three weeks saw the dollar dump against all the other majors.
The move continued this morning as the cash Dollar Index extended its losses for a second consecutive session. Yesterday morning, it got as high as 100.46, its best level since May last year. The Dollar Index had been a major beneficiary of Middle Eastern hostilities.
This time last month, it soared as investors bought up dollars in a ‘flight to safety’, spurning previous havens such as precious metals, US Treasuries and currencies such as the Japanese yen and Swiss franc.
It finally looked as if the Index had broken decisively above long-term resistance at 100.00, thereby signalling that the US dollar may have finally put in a bottom after a dismal twelve months. But it now looks as if the dollar bulls will have to sit on their towels and hope for a different signal to indicate that it’s safe to go back in the water.
Source: TN Trader
President Trump’s remarks reinforced expectations that US strategic objectives had largely been achieved and contributed to a shift in risk sentiment across global markets. But this could all unravel as quickly as it began. Traders will be paying close attention as Mr Trump addresses the world about the war at 01:00 GMT Thursday morning.
