The US dollar is again gaining momentum following its long decline, showing an upward trend by the middle of this week. Experts note the strengthening of the USD against most global currencies, primarily the yen.
The US dollar gets a second wind on Wednesday strengthening its position against the major world currencies, especially the Japanese yen. The greenback hit a five-month high against the yen. The driver of this growth was a sharp rise in the price of US government bond yields. Note that the yield on 10-year securities reached the highest since February last year. The value of US government bonds rose due to improved prospects for economic recovery and possible acceleration of inflation. According to analysts of Trading Economics, the growth of real profitability increases the attractiveness of the USD. However, experts stressed that the further strengthening of the greenback is hindered by large-scale measures of economic support in Europe and the United States, particularly the proposed $1.9 trillion incentive package.
According to experts, the current strengthening of the dollar provides an excellent opportunity for its sales. Since the rise in yields has become a key factor in the appreciation of the USD, therefore, if the yield on 10-year Treasuries rises to 1.40%, then the greenback will have a chance for further growth. However, experts recommend using it to open short positions in USD, believing that the current surge in yields is a consequence of technical rather than economic factors.
The euro slipped slightly against the US dollar but continues to hold the gained positions. The euro's relative stability is fueled by growing optimism about the prospects for the European economy. On Wednesday, the EUR/USD pair is moving in the range of 1.2079-1.2080. Experts are concerned about a possible reversal of the tandem downward. If this scenario occurs, the EUR/USD pair will approach the critical level of 1.2050. Recall that the pair began to recover from the breakdown of this barrier. According to experts, a fall to 1.2050 increases the likelihood of a pullback of the EUR/USD pair to this month's lows
According to analysts' calculations, the dollar will win back its losses shortly, but in the medium and long-term planning horizons, it will not be able to continue its rise. It is possible that the greenback will not have enough strength, but they are enough to stay afloat.
