The euro continues its bullish escalation this Monday against the dollar, in the run-up to the meeting of the US Federal Reserve (Fed), which the market expects to pave the way for a new round of stimuli that could come in September. The community currency has stretched its maximum of 22 months, up to $ 1.1764 and chained seven consecutive sessions of rises, in a day in which the pound reaches its best change since March 11 at $ 1.2860.
However, the outlook in the currency market points to dollar weakness as main driver of bullish current which shakes the major currencies, as the yen has also touched a maximum of four months, while the Swiss franc has reached a five-month milestone against the "greenback."
The Fed meets Tuesday and Wednesday after labor data last week showed that the recovery in US employment was reeling. No major announcements are anticipated, but analysts hope that policymakers can begin to lay the groundwork for more actions in September or the fourth quarter.
The EEU central bank could reaffirm on recent hints about the benefits of an average inflation target, which would allow rates to stay lower for longer. "I think we are seeing that the US dollar is adjusting to this fact," said Chris Weston, head of research for Melbourne broker Pepperstone.
"If they are ever going to have inflation … then the reaction is to allow the economy to heat up over a long period of time," he said. "Therefore, the possibility that the Fed will rise in the next five years is increasing in value in the US dollar: there is a boost in trade as people present this short position at the Fed meeting."
The value of short dollar positions peaked in two years last week, while the futures market is setting negative rates in the United States next August and without a bullish movement in the next three years.
The euro rose 0.5% to $ 1.1725 and the anti-POI currencies gained by the same margin, while the British pound and the Singapore dollar hit four-and-a-half month highs.
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