Will dollar extend gains?
Further strength in the greenback is possible this week
The Dollar Index continued to trade weak almost all through last week. The index fell to a low of 90.42 but made a sharp recovery in the US session on Friday. Euro rose above 1.21 after the US Federal Reserve meeting on Wednesday. However, it failed to sustain higher and tumbled below 1.21 on Friday to close on a weak note at 1.2021. The US Federal Reserve meeting last week became largely a non-event as the central bank made no change in its stance.
Fed on hold
As expected, the US Federal Reserve last week left the market with no surprise. The Fed kept the interest rates and its stimulus programme unchanged. The US Federal Fund rate is currently at 0 -0.25 per cent. The central bank also reiterated to support the economy with the stimulus as long as needed. Currently the Fed’s stimulus asset purchase is of the quantum of $120 billion per month. The outcome of the Fed meeting had no impact on equit
The level of 90 in the dollar index can halt the current decline
The US dollar index continued to trade weak all through last week. The Dollar Index fell for the third consecutive week and closed at 90.83, down 0.84 per cent for the week. The index has fallen 2.3 per cent over the last three weeks. Strength in the Euro, subdued Treasury yields, weighed on the index. There is room for the dollar to weaken further. The US Federal Reserve policy meeting this week on Wednesday will need a close watch to see if it can give a breather for the dollar index and help it recover.