The fear of a global trade war caused heavier dollar selling, short USD/JPY?
Dollar selling pressure intensified after many investors fear that US protectionism policy may lead to a trade war.
- Dollar index closed below the key 90 level overnight, the first time since December 2014, falling over 1%.
- Greenback registered its steepest slide since June last year after US Treasury Secretary Steven Mnuchin said “a weaker dollar is good” for U.S. trade.
- One key upside risk for dollar would be if there is any Draghi’s verbal intervention tonight to causes a euro pullback by cautioning about euro strength.
- Fundamentally, dollar’s weakness was mainly due to three-year flattening yield curve in US Treasuries and overseas economic growth.
- Our chief strategist Jimmy Zhu was interviewed by Bloomberg TV 2 days ago and mentioned that “there is a lack of fundamentals for dollar to rebound at this moment, so it will most likely stay weak for now”. Watch the video now.
USD/JPY’s breakout below the psychological level of 110 could accelerate its drop and pave the way towards 2017 low of 107.32
Fullerton Markets Research Team
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