BTMU FX Strategy Research notes that as the USD comes under aggressive sell-off this week, it has now fully reversed all the initial gains following the election victory for President Trump.
Such price action, according to BTMU, provides further evidence of the ongoing loss of confidence in the Trump administration’s ability to materially boost US growth with the the latest political developments in the US are contributing to building investor skepticism in that regard.
“Heightened political uncertainty is reinforcing the negative impact on the US dollar from the softening US economic data flow. It supports our view that the US dollar is likely to remain offered in the near-term,” BTMU argues.
Hence, BTMU maintains its more bearish than market consensus view for the USD arguing that Fed rate hikes will not likely provide much support for the USD given the shifting stance from other central banks which will prove more significant in limiting the scope for any shift in yield spreads.
EUR/USD is trading circa 1.1155 and USD/JPY circa 110.95 as of writing.
Source: BTMU Research
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