The dollar index, which measures the strength of the US dollar against other currency pairs on average – has shown rapid growth over the previous week extending gains to the new week.
The dollar rose significantly last Friday with the positive reports from the US job growth that increased substantially more than expected. Last Friday, the NFP report showed that 431,000 new jobs were created in the just concluded month of March. The US unemployment rate dropped significantly by 3.6% the previous month, the lowest since 2022.
The prospects of improved job creation further the general anticipation for an imminent increase in the interest rate by the Federal reserve sooner than expected. The dollar index had ended the week with rapid growth of over 0.45%, creating a new ATH at 99.4.
This positive trend for the dollar has been carried over to this new week, with the dollar performing strongly against other pairs, especially USDJPY. We saw the DXY at 98.5 during the Asian session and thrust higher.
This week undoubtedly appears very promising for the US dollar once again. The failure of Russia and Ukraine to arrive at a peaceful resolution of the conflict after the peace talks in Istanbul last week is a clear indicator that EURO will depreciate further. At the same time, the dollar will remain the favored currency due to the crisis.
There are no imminent plans by the European Central Bank to raise interest rates any time soon as to boost the Euro once again amidst the dilapidation caused by the wars. On Saturday, ECB board member Isabel Schnabel said that ECB would only consider hiking the Euro interest rate towards the year-end by Q3 after winding down its bond purchase program in the third quarter of the year.
Above all, the increasing dollar strength attracts more investors to buy dip into the US stocks. Hence we see many US stocks performing well, especially the S&P 500 family.
