Forex Today: Dollar gives up despite worrisome developments

Valeria Bednarik FXStreet

What you need to take care of on Wednesday, March 23:

The American dollar edged lower against most major rivals on Tuesday, except against the Japanese yen, with USD/JPY soaring to 121.02, its highest since February 2016. The greenback advanced during the Asian session, following the lead of soaring US government bond yields after Fed Chair Powell hinted at a 50 bps hike in May.

However, European indexes only managed to post some modest gains, putting a halt to the dollar’s demand. Wall Street followed the lead of its overseas counterparts, also posting gains and weighing on the dollar. Speculative interest ignored bonds sell-off that sent the yield on the US 10-year Treasury note to a multi-month high of 2.39%.

The EUR posted a tepid advance vs the greenback, with the pair now trading in the 1.1020 price zone. The Union is too close and too affected by the Russia-Ukraine conflict to actually see its currency appreciate, despite mounting speculation the ECB will have to hike rates by at least 50 bps before the year-end.

The GBP/USD pair reached a fresh three-week high of 1.3273, retaining most of its intraday gains by the end of the day.

The AUD/USD pair reached a fresh 2022 high of 0.7469, trading nearby ahead of the Asian opening, while USD/CAD consolidated losses near its weekly low at 1.2564.

Crude oil prices started the day with a strong footing but finished the day with modest losses. WTI settled at around $109.00 a barrel.

Gold edged sharply lower during US trading hours, bottoming for the day at $1,910.64 a troy ounce. It later recovered and ended at around $1,922.00.

Meanwhile, the number of coronavirus contagions keeps rising in Europe, mostly linked to the BA2 variant. The World Health Organization blamed it on European governments lifting restrictions too soon.

Additionally, Russia continues to escalate its attack on Ukraine, with no solution at sight for the Eastern European crisis.

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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