Dollar bulls are retreating again on Friday after some recovery attempts seen yesterday. Risk sentiment rebounded and sent global stocks higher amid stimulus hopes and expectations of a more rapid economic recovery. On Thursday, the ECB expanded stimulus measures in a bid to support the economic recovery in the region. Now, investors price in more supportive measures from Trump administration. For now, this is the key bullish driver for equities, which is weighing the safe-haven dollar demand.
Also, market participants are cheering the continuing rally in the oil market. Brent is back above the $40 handle and is now flirting with the $41 level for the first time in two months. Oil traders are inspired by the reports that the OPEC+ virtual meeting will likely take place on Saturday. It is widely expected that the exporters will extend the deal and will continue to cut oil output in an effort to support the market.
It looks like the selling pressure surrounding the greenback will persist in the short term. Of note, the US NFP report due later today could add to the pressure as better-than-expected numbers may fuel risk-on tone further amid optimism on the outlook for the US economy after the coronavirus pandemic.
Amid the ongoing weakness in the US currency, EURUSD jumped to two-month highs around 1.1385. but the bulls were deterred by the 1.14 psychological handle and proceeded to profit-taking. As a result, the euro turned red on the day, threatening the 1.13 level. In the short term, the pair may regain the lost ground if risk sentiment remains positive.
Meanwhile, USDJPY climbed to late-March highs around 109.40 on Friday. The pair continues to exit the familiar trading range, and it looks like the prices are ready to extend the current ascent in a risk-positive environment. A weekly close above the 109.00 handle will be seen as a bullish technical signal.
