Tide Turns For USD
After two days of sharp declines for the US dollar, a recovery has been seen against the Euro.
The rise in USD against the Euro is likely based on speculation of the spreading credit crisis hitting Eurozone banks Technical charts confirmed the Euro rose too quickly after posting its biggest two-day gain since Jan 4-5, 2001.
Gloomy news is likely ahead for Merrill Lynch and UBS who are expected to post losses this quarter from further write-downs of debt.
In the longer-term, many traders are expecting the Federal Reserve to lower the benchmark rate by a half percent to 1.75 percent at a meeting on April 30. According to chief currency strategist at Commonwealth Bank of Australia, Richard Grace “An unexpected downward revision to GDP could be a catalyst for a weaker dollar, we’re entering a period when the U.S. dollar can overshoot to the downside. In the next month I can see the Euro getting to $1.60.” - Bloomberg
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