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The EURUSD pair corrected lower during the course of the day yesterday on the back of some dollar strength that was seen all across the markets yesterday. It is indeed a surprise to see the strength in the dollar especially at a time when the conflict in Syria is about to escalate and it looks only to be a matter of time before that happens.
EURUSD Lower
But on the other hand, the dollar, among others, is generally viewed as a safe haven at times of risk and uncertainty and this could probably be one of the reasons for the dollar to gain in strength during this period. The US administration continues to discuss on options as far as Syria is concerned and depending on how these discussions pan out in the coming days, this could pose a serious threat to the global risk in the short term. The traders would be well advised to remain flat going into the weekend and we believe that what most of the investors would aim to do as well.
There is also the small matter of an escalating trade war between the US and China and this is also expected to only get worse as time goes on. Due to this, the markets are expected to be volatile and the true depth of this development has not yet been felt in the markets, we believe. We will know about that when the geopolitical risks and uncertainties begin to clear up in a slow and steady manner.
Looking ahead to the rest of the day, we do not have any major economic news or data from the US or the Eurozone and hence the focus is likely to be firmly on the developments around Syria and the trade war. Going into the weekend, we expect the market to try and take some profits as they would not be wanting to hold the risk on what is likely to be an action packed weekend.
This article was originally posted on FX Empire