Forex News: Dollar Rebounds As War Clouds Boost Haven Bids

Dollar Rebounds As War Clouds Boost Haven Bids

(RTTNews) - The U.S. Dollar rebounded emphatically against major currencies during the week ended March 27, buoyed by safe haven demand attributed to uncertainty surrounding the trajectory of the Middle East war. Expectations that the war-led spike in energy prices would force interest rates to remain high for longer than expected also boosted the greenback.

Here is a quick recap of the dollar's trajectory during the week ended March 27. During the week, the U.S. dollar inter alia rallied against the euro, the British pound, the Australian dollar, the Japanese yen, the Swedish krona, the Canadian dollar and the Swiss franc. The 6-currency Dollar Index added half a percent over the course of the week.

The Dollar Index (DXY), a measure of the Dollar's strength against a basket of 6 currencies added 0.50 percent during the week ended March 27. The DXY which had closed at 99.65 on March 20 finished trading at 100.15 a week later. During the week, the index traded between the low of 98.88 recorded on Monday and the high of 100.21 recorded on Friday. As safe haven bids boosted the greenback, the EUR/USD pair slipped 0.53 percent in a week. During the week ended March 27, the EUR/USD pair dropped to 1.1510, from 1.1571 a week earlier as the region grappled with disruptions in energy, especially natural gas. The pair ranged between a weekly high of $1.1640 and a weekly low of $1.1484, both recorded on Monday.

The week ended March 27 also witnessed the pound falling 0.61 percent against the dollar. The sterling, which had closed at $1.3342 on March 20 declined to $1.3260 by March 27. The GBP/USD pair traded between a high of 1.3481 and a low of 1.3256, both recorded on Monday. Data released during the week had shown inflation remaining steady at 3 percent in February.

The Aussie also plummeted against the U.S. Dollar during the week ended March 27. The slippage for the AUD/USD pair during the week was around 2.2 percent, from 0.7024 on March 20 to 0.6873 on March 27. The pair traded between the week's high of 0.7064 recorded on Monday and the week's low of 0.6864 recorded on Friday.

The Japanese yen also plunged 0.68 percent against the U.S. dollar during the week ended March 27. The USD/JPY pair which had closed at 159.23 on March 20, jumped to 160.32 in a week's time. During the week, the pair ranged between 158.03 touched on Monday and 160.42 recorded on Friday.

Sentiment in the currency market remains fragile as markets confront the mixed signals from Iran and the United States on the efforts to end the war quickly. Amidst fears of an escalation in the geopolitical tensions, the safe haven dollar has resumed its climb. The six-currency Dollar Index has touched a high of 100.54, versus Friday's closing level of 100.15. The jump in crude oil prices also supported the Dollar's climb against major currencies.

As persisting geopolitical tensions fuel safe haven demand for the dollar, the euro and the pound have retreated further. The EUR/USD pair has slipped 0.42 percent to 1.1462 from 1.1510 at close on Friday. The GBP/USD pair has decreased 0.57 percent to 1.3184 from 1.3260 at the end of the previous week. The AUD/USD pair which was at 0.6873 at close on Friday has declined to 0.6839. The USD/JPY pair has however fallen to 159.57 from 160.32 at close on Friday as Bank of Japan, in a document released on Monday highlighted the inflationary pressure from oil and a weak yen.

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