The US Dollar Index held near to a 3-year trough during Asian trading on Friday and is set to record the largest 1-week loss since May. The Index, used by traders to gauge the greenback’s strength relative to major peers, held at 88.438 .DXY, the 3-year low set last month and on track for a 2% loss for this week. Analysts say that the greenback is coming under pressure for myriad reasons, including worries that the Federal Reserve might now plan to pursue a strategy of a weaker Dollar even as other major central banks begin to rein in loose monetary policy.
As reported at 9:56 am (JST) in Tokyo, the USD/JPY was trading at 166.114 Yen, down 0.03%; the pair earlier hit a low of 106.024 Yen, while the peak for the trading session is a distant 106.353 Yen. The NZD/USD is trading higher at $0.7405, a gain of 0.059%; the pair has ranged from $0.73896 to $0.74070.
Lack of Confidence Weighing on Greenback
Analysts say that investor confidence in the greenback has been waning in tandem with worries over the US deficit; the latest projections show the deficit will rise to near $1 trillion next year, largely as a result of large tax cuts for corporations and rich individuals as well as increased government spending. Currency strategists say that the Japanese Yen, a perceived safe haven asset, is likely to benefit from the uncertainty with the USD/JPY pair heading for the 105 Yen level. Analysts say that the EUR/USD is likely to continue to move well past the $1.25 level, especially given the improving fundamentals within the Eurozone and the likelihood of tightening from the European Central Bank. Currently, the EUR/USD is trading at $1.2509, a gain of 0.06%.
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