Forex Today: Dollar plunges of fresh hopes
29.03.2022, 19:39

Forex Today: Dollar plunges of fresh hopes

What you need to take care of on Wednesday, March 30:

The dollar plunged alongside other safe-haven assets amid renewed hopes for a diplomatic solution to the Russia-Ukraine conflict. Risk appetite surged following headlines indicating a de-escalation of Russian attacks around Kyiv and Chernihiv, as announced by Russia's mediator Vladimir Medinsky.

Ukraine has suggested a new security guarantee system, with Turkey as one of the main potential security guarantors. If the security guarantee system works out, then Ukraine will agree to neutral status, including not to host foreign military bases in its territory. Kyiv wants to hold a referendum on Ukraine's neutrality.

Meanwhile, the US yield curve temporarily reverted, as the 2-year and the 10-year Treasury noted were hovering around 2.40%, although that on the shorter note retreated to 2.35%. An inverted yield curve is usually seen as a sign of recession.

Wall Street rallied following its overseas counterparts on easing concerns related to the Eastern European crisis.

Central banks and potential rate hikes returned to the spotlight. Financial markets are pricing in a 60 bps hike in Europe, while US Philadelphia Federal Reserve President Patrick Harker noted that rate hikes should be methodical. He said he would not rule out a 50 bps hike in May but would not commit either. Finally, he added that the balance sheet reduction could be equivalent to two quarter-point rate increase.

The EUR/USD pair trades just below the 1.1100 threshold, maintaining its bullish potential. GBPUSD struggled to post gains, now trading at around 1.3100. Commodity-linked currencies find room to advance at the end of the American session, with AUD/USD trading above 0.7500 and USD/CAD in the 1.2480 price zone. The USD/JPY pair settled around 122.90.

Commodity prices were firmly down, with WTI currently trading at $104.30 a barrel. Spot gold fell to $1,890.05 a troy ounce, to later bounce to settle around $1,917.00.

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