Forex analytics and overview

U.S. Dollar As A Safe Haven Of Last Resort

2022.05.06 13:10

The dollar index renewed its highs in almost 20 years, surpassing 104, as crucial US currency rivals one by one lost buyer support.

U.S. Dollar As A Safe Haven Of Last ResortDXY monthly chart.

Suddenly the dollar was a safe haven of last resort. In 2018 and 2020, the dollar was approaching current extremes amid a total sell-off in equities and commodities. But in those years, flight to safety forced demand for the yen and franc, which is not the case this time as both ‘havens’ are at multi-year lows with equity markets falling.

The Dollar Index has been testing the upper end of its trading range for the last six years, and it now has a much higher chance of holding above that level. The previous two times the DXY got close to 104, the economy and inflation needed stimulus, not cooling as they do now.

This is a sharp reversal in attitude to the dollar, which in 2021 was often described as losing its value and leading currency status. While its relevance as a means of payment continues to be debated and questioned, its increasing rate, coupled with more attractive US government bond yields, makes the dollar an almost uncompromising choice at the moment.

European or Japanese politicians can hardly be expected to be complacent about the depreciation of their currencies, further fuelling inflation and exacerbating economic problems.

The Japanese authorities successfully talked the markets down at the end of April by stopping the yen’s decline near 130. Over the last couple of days, we have seen an intensification of policymakers and economic institutions from Continental Europe, indicating the need to raise rates soon to match the pace of tightening from the Fed.

At current levels, the dollar has found itself in a zone of turbulence, which clearly shows the scope for the GBP/USD to fluctuate over the last 24 hours. A consolidation above 104 at the end of the week would confirm that the next technical stop for the DXY could be around 120, which is the high of the early part of this century.

Source

Related Articles

Leave a Reply

Back to top button
bitcoin
Bitcoin (BTC) $ 105,433.25 3.08%
ethereum
Ethereum (ETH) $ 3,269.30 5.41%
xrp
XRP (XRP) $ 3.11 1.95%
tether
Tether (USDT) $ 1.00 0.02%
solana
Solana (SOL) $ 242.10 6.04%
bnb
BNB (BNB) $ 680.06 2.38%
usd-coin
USDC (USDC) $ 1.00 0.00%
dogecoin
Dogecoin (DOGE) $ 0.333869 2.66%
cardano
Cardano (ADA) $ 0.968492 5.10%
staked-ether
Lido Staked Ether (STETH) $ 3,268.51 5.46%
tron
TRON (TRX) $ 0.251468 5.44%
chainlink
Chainlink (LINK) $ 24.88 9.43%
avalanche-2
Avalanche (AVAX) $ 34.46 5.59%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 105,073.15 2.88%
stellar
Stellar (XLM) $ 0.439475 12.45%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,894.54 5.66%
sui
Sui (SUI) $ 4.16 12.52%
hedera-hashgraph
Hedera (HBAR) $ 0.317504 5.00%
the-open-network
Toncoin (TON) $ 4.83 0.11%
shiba-inu
Shiba Inu (SHIB) $ 0.000019 3.76%
litecoin
Litecoin (LTC) $ 130.17 16.66%
weth
WETH (WETH) $ 3,271.47 5.55%
polkadot
Polkadot (DOT) $ 6.15 9.03%
hyperliquid
Hyperliquid (HYPE) $ 26.90 17.95%
leo-token
LEO Token (LEO) $ 9.76 0.02%
bitcoin-cash
Bitcoin Cash (BCH) $ 436.71 6.53%
bitget-token
Bitget Token (BGB) $ 6.94 3.50%
uniswap
Uniswap (UNI) $ 12.07 3.93%
usds
USDS (USDS) $ 0.999355 0.14%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,461.50 5.49%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.04%
pepe
Pepe (PEPE) $ 0.000013 6.84%
mantra-dao
MANTRA (OM) $ 5.73 26.54%
official-trump
Official Trump (TRUMP) $ 27.35 0.51%
near
NEAR Protocol (NEAR) $ 4.63 5.75%
ondo-finance
Ondo (ONDO) $ 1.61 13.78%
aave
Aave (AAVE) $ 316.09 9.11%
aptos
Aptos (APT) $ 7.93 8.70%
internet-computer
Internet Computer (ICP) $ 9.17 8.04%
monero
Monero (XMR) $ 227.45 2.85%
whitebit
WhiteBIT Coin (WBT) $ 28.44 0.07%
ethereum-classic
Ethereum Classic (ETC) $ 26.53 5.15%
mantle
Mantle (MNT) $ 1.18 10.22%
bittensor
Bittensor (TAO) $ 472.26 2.91%
vechain
VeChain (VET) $ 0.047158 11.24%
crypto-com-chain
Cronos (CRO) $ 0.13255 2.32%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.417855 6.15%
dai
Dai (DAI) $ 1.00 0.01%
kaspa
Kaspa (KAS) $ 0.132671 9.47%
okb
OKB (OKB) $ 56.25 4.24%