The US dollar has been weak this week compared to major other currency pairs. In the forex market some currencies go up during the whole week, some pairs go sideways, while some others go down. The move is often a pure result of fundamental news. It makes sense for a currency to strengthen versus another one if there is good economic news, especially if there are surprises in the forecasts made by analysts and economists. This week ending 29th July 2016, the US dollar was the big loser in relative value and there is a good explanation for that.
The first reason for US dollar weakness.
The first reason why the US dollars lost momentum and strength was the much-anticipated interest rate decision from the Federal Reserve bank. The decision was to let the main interest rate unchanged at 0.5% and although this was not a surprise, it was enough to become the first move which weakened the US dollar versus major currencies. Some may claim that there could be a short squeeze or short positions covering. This happened on Wednesday 27th July 2016 and was enough to set a tone for the rest of the week.
Second contributing factors.
The second and equally important reason for the weakening of US dollar versus almost all major other currencies came on Friday 29th July 2016. It is noteworthy that Friday's are often volatile trading and investing days, especially when major fundamental news is released. The news that accelerated the down move of the US dollar compared to major other currencies was the release of the gross domestic product, which showed that the US economy grew at a slower rate that was expected again by analysts. This macroeconomic effect is very important as indicators that show if an economy is growing or not often set the tone of a trend, up or down.
It is very important to have a well-written investing and trading plan when investing any amount of money or capital in any financial market. Having a daily look at the economic calendar for news that may be important or not for stocks or for the forex market may be one of the most important trading decisions an investor can make to be well prepared before deciding to buy or sell any financial instrument. #Finance #Investment