The US dollar began the new trading week with a success. It continues to move in an upward trend, despite the previous negative forecasts regarding its decline.
Yesterday, the US currency started rising after the publication of strong US labor market data last Friday. Against the euro, it added 0.7%, reaching the level of 1.9000. On the morning of March 9, the Euro currency showed weak upward correction against the US one. At the same time, the dollar index updated four-month highs, rising by 0.03%, that is, to 92.34 points. Analysts from Bloomberg believe that the growth in the USD index indicates that the US dollar will further rise.
On Tuesday, the EUR/USD pair remains around the range of 1.1857-1.1858. Experts consider it one of the most vulnerable pairs, maintaining high volatility this week. They also do not rule out that the US dollar's increased demand and the ECB's "dovish" rhetoric will push the pair to new lows. It should be recalled that the EUR/USD pair fell for the sixth time out of the last seven trading days.
The current situation turned out to be favorable for the US currency, which is still in great demand among investors. The catalyst for this interest was the US Senate's approval of a $1.9 trillion stimulus package. According to analysts, the adoption of this bill provoked another sell-off in the bond market.
Another supporting factor for the USD strengthening is the active growth in the yield of US Treasury bonds. The rates on these 10-year securities surpassed 1.6% per annum, moving above the high of February 2020. This helped the US dollar surge and strengthen against most leading currencies. At the same time, hedge funds, which opened many short positions in the US currency last year, are withdrawing from rates against the US dollar.
The reduction in short positions on the USD comes amid the improving prospects for the US economy and rising yields on US Treasury bonds. At the same time, the price of the US dollar continues to grow, looking proudly at those who predicted it to further fall.
However, the problem was the recent forecast of analysts at BNP Paribas. According to them, the rates of 10-year Treasuries will reach 2% per annum in the process of inflation growth. This may result in the Fed's tightening of monetary policy, which is expected at the end of 2022.
