Dollar Losses Accumulate With No Sign of Recovery, Euro Bounces

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In a calm session today, the dollar is holding its late-week losses, but there is little sign of a resurgence. On the other hand, the yen is slightly higher due to the region’s sluggish stock markets. As the current rally loses some upside momentum, gold is battling below the 1900 handle. WTI crude oil also falls short of the 70 handles.

US Treasury Department Janet Yellen said in an interview with Bloomberg that a $ 4 trillion spending plan would be good, even if it leads to higher inflation and higher interest rates. “If we ended up with slightly higher interest rates, it would be a plus for the public and the Fed’s perspective,” she added.

“We’ve been fighting too-low inflation and too low-interest rates for ten years now,” the former Federal Reserve chairman said, adding that “we want them to return to a“ normal interest rate environment, ”and if that helps ease the situation, then it’s not bad – it’s good.”

In the currency market, not much has changed after a week away. Overall, the US dollar appears to be weakening as inflationary fears fail to show up in statistics beyond a reasonable doubt. As a result, markets have been boisterous but ultimately range-trading. On Friday, the dollar index retraced much of Thursday’s gains, sliding 0.40 percent to 90.13. The index is still stuck in a broad range of 89.50 to 90.50, with a breakout signaling the US dollar’s next move.

Amid Steady Dollar, Euro Bounces From 1.21

The EUR/USD has risen above 1.2150, recovering earlier losses caused by US Treasury Secretary Janet Yellen’s remarks that higher interest rates are a good thing. Tensions are rising ahead of the ECB’s and US government’s inflation figures. In the bottom bound of the recent range and following Friday’s post-NFP sell-off, DXY is navigating without a distinct direction.

In the previous week, the Euro attempted a couple of efforts to break through 1.2250 and 1.2260 against the US Dollar. The EUR/USD failed to maintain its upward trend and fell below 1.2200. Euro (1.2166) has bounced strongly from 1.21 during today’s session, and if it maintains, we might see a move over 1.22.

Fundamentally, the US Bureau of Labor Statistics released its nonfarm payroll report for May 2021 on Friday. A 650K gain was expected by the market. The actual outcome was lower than expected, with nonfarm payrolls increasing by 559K in the United States. Furthermore, the previous reading was increased from 266K to 278K. The US Dollar is consolidating its losses in general. If the EUR/USD exchange rate remains stable, the currency pair may hold firm above 1.2100 and it may advance to 1.2250.