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Another Difficult Week for Dollar Traders Ahead? Very Likely

August 26, 2013 at 13:34 by Vladimir Vyun

Ulysses S. Grant on US 50-dollar billThe US dollar has experienced a rather volatile week as traders were digesting the words of the Federal Reserve about its future monetary policy. What does the current week hold for the greenback? Perhaps, yet another period of unpredictable moves.

Recently, the US currency was mainly driven by speculations about possible quantitative easing tampering. Such talks will likely affect the behavior of the currency in the near future, meaning that the dollar will swing back and forth depending on the outlook of the market participants.

Most analysts expected the Fed to reduce the size of asset purchases as soon as September and positive macroeconomic data support such view, but several negative reports at the end of the last week caused some doubts. There will be couple of economic releases this week which should affect the currency: durable goods orders, consumer confidence, pending home sales and gross domestic product. Any surprises in these reports can push the greenback up (if the surprises are good) or down (in case they are bad).

It is hard to predict the actual effect of US economic data on the currency, making some experts neutral on the dollar. But looking at specific currency pairs one may find reasons to be bullish on the greenback. According to Forex Crunch, adverse domestic fundamentals should drive the yen, the Australian and the Canadian dollar down against the greenback.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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