The US dollar struggled last week and market participants are increasingly challenging the ability of the greenback to continue the upward trend that it commenced last summer. The dollar index has appreciated over 20% in the past ten months and the recent weakness in US economic data is one of the main reasons for investors having second thoughts about the dollar bull market. Expectations for the first rate hike have been pushed back considerably with the number looking for June to mark the Federal Reserve’s first rate hike since 2006 in the minority.
A clear indication of the dollar’s recent struggle is the recovery of EURUSD which is trading at 1.0800 at the time of writing, as this move higher by the euro has come in the face of mounting tensions between Greece and its creditors. Chances of a Grexit have been steadily growing, yet the euro has held its ground. Even sterling has burst higher against the dollar recapturing the 1.5000 level last week, this in the face of growing uncertainty over the outcome of the General Election. GBPUSD trades at 1.4950 this morning.
The focus will remain on Greece this week ahead of yet another deadline this Friday for the seemingly never ending negotiations. For today there’s little in the way of major economic data releases but attention should be given to a speech from the RBA Governor later, in particular to see what attention he gives to the recent rebound in AUDUSD.