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Multinational currencies are taking a breather, and dollar bulls are exhausted? Will AI become the last shot in the arm?
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Hello everyone, today XM Forex will bring you "[XM Forex]: Multi-national currencies take a breather, US dollar bulls are exhausted? AI is the last shot in the arm?". Hope this helps you! The original content is as follows:
Euro/USD (EUR/USD) rebounded slightly before the opening of the New York trading session on Friday, trading at 1.572. Since this week, the euro has fallen more than 1.4% cumulatively, with a high probability of recording its worst weekly performance of the year. At the same time, the Japanese yen also has the opportunity to record its worst weekly performance of the year. The U.S. dollar index, which is weighted by multiple currencies, naturally has an excellent weekly performance and is currently trading at 99.34.
The aftermath of French politics may provide a short respite for the euro
This week, after French Prime Minister Sebastian Le Corni unexpectedly submitted his resignation, political uncertainty in France has significantly suppressed the euro. The market is currently waiting for President Emmanuel Macron to appoint a new prime minister.
The new prime minister will face the same challenge as the previous five prime ministers: pushing for the implementation of the austerity budget bill against the backdrop of fierce opposition within parliament. Faced with the political dilemma, Macron does not have many options.
Resigning voluntarily is not only a firm denial by himself, but the French constitution's strict procedures for impeaching the president also make this path unprecedented since 1974. Since Macron's presidential term will last until May 2027, there is still one year left. At the same time, someone will eventually take over the hot potato of the prime minister, which also resolves some market concerns about France's internal affairs and may provide a breathing space for the euro.
Sudden changes in Japan's political arena have caused the appreciation of the yen
For the yen, the US dollar has also gained support from similar risks of political party changes in Japan. But just today, according to Japanese broadcaster NHK, Japan's Komeito Party will withdraw from the ruling alliance with the Liberal Democratic Party.
The TV station said that the leader of the Komeito Party has expressed his intention to withdraw from the ruling alliance to the leader of the Liberal Democratic Party, Takaichi Sanae.
Sanae Takaichi, the new president of the Liberal Democratic Party, who originally held a stimulus policy stance, has a high probability of becoming Japan's next prime minister. However, the sudden defection within the party has caused uncertainty in the election of Japan's prime minister. To say the least, even if Sanae Takaichi is elected prime minister, it will be more difficult to pass many expansion bills in the face of the lack of supporting seats in the Senate. This gave the yen another chance to breathe.
Due to the delay in the release of most U.S. economic indicators due to the U.S. government shutdown, the recent dovish remarks released by Federal Reserve policymakers, www.xmltrust.combined with the situation in France and Japan, have curbed the dollar's rapid rise to a certain extent.
Summary of daily market dynamics: The U.S. dollar leads the way amid political uncertainty
The recent market lack of official data can refer to the University of Michigan Consumer Confidence Index, but it is worth noting that the University of Michigan’s Consumer Confidence Index has been criticized for having partisan attributes. Because it often reflects a defensive nature when the economy performs poorly, it always looks better than it actually is.
The U.S. dollar significantly outperformed other major currencies this week. The U.S. dollar index (DXY), which measures the U.S. dollar's exchange rate against six major currencies, has risen nearly 1.7% this week and is expected to record its best weekly performance this year. The political deadlock in France, coupled with market concerns that Japan's new cabinet may hinder the Bank of Japan's tightening plan, triggered a rise in market risk aversion, which in turn boosted the market's speculative demand for the U.S. dollar.
In France, President Macron is expected to appoint a sixth prime minister in the next 24 hours to circumvent opposition parties' demands for parliamentary elections. But amid a deeply divided parliament, markets remain skeptical of its chances of passing a new budget.
The minutes of the European Central Bank (ECB) September monetary policy meeting released on Thursday showed that although policymakers believe that there is currently no urgent pressure to adjust the central bank's policy, concerns about the uncertainty of the global situation have significantly intensified. On the issue of inflation, there are certain differences within the www.xmltrust.committee: some members believe that there are upward risks, while others judge that price pressures are gradually easing. The impact of the minutes of this meeting on the euro is relatively limited.
San Francisco Federal Reserve President Mary Daly said that amid the worrying deterioration of the U.S. labor market, further interest rate cuts will be necessary in the www.xmltrust.coming months.
Technical analysis:
The euro has further fallen below 1.1600, the key price that the whole market is watching. Technical bulls may choose to stop the loss and give up resistance. At the same time, the shorts have been vented. It has stopped falling near the upward trend line and started to brew a rebound. The daily line has www.xmltrust.completed 5 www.xmltrust.complete waves of decline.
The yen exchange rate has not developed further for 2 consecutive days. After the exchange rate touched the upper channel, the yen short sellers slowed down.
The U.S. dollar index stopped near 99.36, which has been mentioned repeatedly before, that is, the U.S. dollar was on the day when the U.S. non-agricultural data was significantly revised down on August 1.The 50% percentile of the large negative line of the index. www.xmltrust.combined with the technical movements of the three currencies and the domestic domestic situation in France and Japan, the momentum for the dollar's rise here may be significantly weakened.
So by www.xmltrust.comparing the technical trends of the three currencies, www.xmltrust.combined with the fact that the French president still has a stable term of one year and the variables of the Japanese prime minister election, all point to weakening the continued upward momentum of the US dollar.
Of course, another point is the logic of the United States. It is not based on domestic economic data in the United States, but on the fact that the United States is the current AI powerhouse. AI giants continue to release positive signals in the capital market. This may also be a major reason behind the strength of the US dollar. In theory, there is an opportunity to continue to be a boost to the US dollar before the AI wave is falsified.
The above content is all about "[XM Foreign Exchange]: Multi-national currencies are gasping for breath, and the US dollar bulls are exhausted? AI is the last shot in the arm?" It is carefully www.xmltrust.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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