Dollar Forex Market Softens on Improved Market Mood



  • Euro Flounders Ahead of ECB Policy News
  • Pound Battles Back Against Challenges 
  • Wall Street Recovery Continues to Roll

It has been a rollercoaster week for the forex market and those trading it. COVID-19 concerns took over in the early part of the week as Delta variant worry dropped the market around the world. In the last couple of days, there have been pickups in market sentiment though the Euro continues to struggle gaining any ground on a slightly weaker Dollar ahead of the key ECB policy announcement. Sterling has rebounded better while Wall Street has recovered more than it lost in the earlier part of the week over back-to-back strong days.

Euro Cautiously Awaiting Policy Announcement

The major driver for those forex trading the Euro today will be the decision on ECB policy that President Christine Lagarde is set to announce. The widespread feeling from analysts is that it could strike a pessimistic tone and outlook, but provide more scope for support and continue to back economic recovery efforts.

In one sense this could push the Euro struggles to continue further, but a more relaxed attitude toward the inflation target of 2% which is expected, could also provide room for markets to run in the right direction. With a dovish sentiment built up by most, any kind of more positive than anticipated policy decisions is also likely to reflect well on the Euro which is currently holding close to 1.18 against the USD.

GBP Overcomes Obstacles to Rebound

The Pound also struggled with forex brokers through the early part of the week. This was much in line with the rest of the market as Dollar strength well and truly took over in the face of fear. Despite its own domestic challenges with COVID still prevalent, and Brexit an added weight, Sterling is managing to mount a recovery late in the week.

The currency has managed to forge a path back from 5-month lows to sit on the upper side of 1.37 against the USD. This is good work against a weaker Dollar considering the ongoing Brexit border row and COVID case rate that still remains in the tens of thousands on a daily basis. On the upside though, the country has successfully completed its self-styled, “Grand Reopening”.

Wall Street Fights Back on Torrid Week

Wall Street continued with a second positive day on Wednesday after a week full of ups and downs. The Dow Jones had faced its biggest losses in 8 months to open the week, losing more than 700 points. Yesterday and the previous day though, all the major indices managed to fight back and eclipse the losses.

The early trading in the futures market also has all of the major markets continuing to rise as the sentiment about-turn keeps going. The next key driver may be the ECB policy decision and US treasury yields with the 10-year yield gaining momentum slightly as the week goes on.



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