US Dollar rally against EUR and GBP was short lived

FXOpen

Yesterday, a dramatic start to the year 2023 began, as the British Pound and Euro sank rapidly against the US Dollar.

Indeed, the British Pound dropped significantly on the first trading day of the year, plunging to its lowest point in over 2 months in the first two hours of the London session yesterday.

Today, things have begun to suddenly reverse, as the US Dollar's rally has subsided.

The US Dollar was in high demand yesterday and as a result the EUR/USD pair was being heavily sold off below 1.0600, correcting sharply from two-week highs above 1.0700.

Many analysts had drawn the conclusion that investors had sought security in the US Dollar ahead of important economic events which are scehduled to take plac this week, including today's S&P Global Manufacturing PMI.

Today, however, this sudden and very pronounced collapse in value by the Euro and British Pound against the US Dollar has been short-lived.

The Pound is back up to 1.21 against the US Dollar from a lowly 1.19 yesterday, a depth that it plumbed at 9.30am on January 3, after opening just two hours earlier at 1.21, which is the value at which it is trading today.

Such sudden volatility among major currencies is rare, and it could be considered that it is a welcome return to interesting changes in value between commonly traded currency pairs after very long periods of stagnation.

Interestingly, the EUR/USD pair has also garnered more interest after dropping to near 1.0650 in the Asian session yesterday morning, that being the first trading session of the year. The major currency pair has recovered as the rebound move in the US Dollar Index (DXY) has faded. The Euro is currently looking steady, however, as investors are awaiting the release of the Eurozone Harmonized Index of Consumer Prices (HICP) data for fresh impetus.

EUR/USD

In general, reports on price indexes, and overall consumer issues are not such big influencers in the value of certain currencies, but over the last two days, volatility has been rife between the US Dollar and its contemporaries on the other side of the Atlantic.

If volatility is the lifeblood of trading, the currency markets are well and truly alive again.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Financial Market News

Weekly Market Wrap With Gary Thomson: FTSE, NZD/USD, USD, USD/JPY Weekly Market Wrap With Gary Thomson: NIKKEI-225, USD/JPY, GBP/USD, USD/CAD, Gold Weekly Market Wrap With Gary Thomson: S&P500, USD, SNB, TSLA A Yen For Volatility: US Dollar Surges as Japan Ends 8 Years of Negative Rates Weekly Market Wrap With Gary Thomson: US500, USD, US Inflation, USD/JPY

Latest articles

Is There the Best Time to Trade Stock CFDs?
Trader’s Tools

Is There the Best Time to Trade Stock CFDs?

If you ask experienced traders, many will say that they trade on certain days or at certain times of the day. Their choice is determined by the market dynamics, volatility, and liquidity. It’s crucial to understand when the best

Shares

UnitedHealth (UNH) Share Price Surges after Strong Report

UnitedHealth shares surged Tuesday, rising more than 5% after the health care giant delivered stronger-than-expected first-quarter 2024 results:

→ earnings per share: actual = USD 6.91, expected = USD 6.61, last quarter = USD 6.16;
→ gross income: actual = USD 94.4

Forex Analysis

USD/JPY Analysis: Prospect of a Breakout of the Level of 155 Yen per Dollar

The USD/JPY rate has consistently reached new highs since 1990, approaching the psychological level of 155 yen per US dollar. The Japanese currency has already fallen about 9% against the dollar this year.

This is supported by Jerome Powell,

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.