Interest rates and economic data may lift USD out of range

Since its rapid appreciation last summer, the USD has remain virtually locked to the Euro and Yen, and fundamental analysts are having a difficult time extracting profits. Unfortunately, barring any unforeseen developments, the USD is likely to remain range-bound in the near-term, lament currency traders. Changes in short-term interest rates and economic data will continue to induce day-to-day fluctuations, but will likely fail to provide impetus for the USD to break out of its tight range. The silver lining is that widening interest rate differentials and optimistic economic forecasts provide a certain amount of downside protection for the Dollar. Therefore, if the USD does break out, it will most likely be an upside move. The Wall Street Journal reports:

“For the dollar to slip you would need the market focus to shift off interest rates, which is possible but doesn’t seem likely,” said an HSBC currency strategist.

Read More: Dollar Expected to Keep Tight Range