US dollar stays stable as Omicron Surge

 US dollar stays stable as Omicron Surge

US dollar stays stable as Omicron Surge

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During the London trading session on Wednesday morning, the safe haven currency drifted lower.

With investors betting that the Bank of Japan (BOJ) would fall behind its counterparts in tightening monetary policy to curb inflation, the yen fell to a near five-year low against the U.S. currency. Other crosses also fell.

Dollar Index, which measures the greenback’s value against a basket of other currencies, declined 0.04% to 96.240 index points on Wednesday morning

The DXY will move higher if it breaks through the 96.94 level and climbs above it. In the event of a breakout, 97.80, a minor swing-high from June 2020, is the next level to watch.

Additionally, congestion from between 99 and 100, just after the pandemic started, will also be a factor.

Tuesday, the yen hit a five-year low of 116.35 per euro and dropped past its 200-day moving average to 131.45 per euro, a two-month low.

Euro prices were around 131.06 per euro early on in the session as the Swiss franc and Australian dollar fell to their lowest levels in more than six years.

A sharply higher COVID-19 case number in the U.S., and a few more in China, appear to be primarily causing supply-chain problems and fears of inflation here in the U.S., as opposed to causing concerns about growth.

In the first trading days of 2022, this led to an increase in U.S. Treasury yields, while the widened gap in Japanese yields also hurt the yen.

During the day, the Federal Reserve will release the minutes of its December meeting, which will provide insights into the central bank’s timetable for rate hikes.

Additionally, investors will await the nonfarm payrolls report for the U.S. on Friday, which will provide more insight.

Currency traders still aren’t thrilled about a stronger greenback despite the recent rally in the USD/JPY pair.

On the first trading day of the year, it is difficult to know how much to read into a rate move. How many hikes will the Fed be able to do without blowing everything up?

Olumide Adesina

Olumide Adesina a France-born Nigerian, a Certified Investment Trader, with more than a decade of working expertise in Investment and Trading. He is also a reputable author and writer for CoinDesk and FxEmpire.

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