On Monday (November 12), the euro fell to its lowest level in seven months against the dollar, primarily due to market concerns that the new U.S. government will advance tariff policies which could impact the economic outlook of the eurozone. The dollar index hovered at a high, trading near 105.49 in early trading, just slightly below the overnight high of 105.70, indicating strong demand for the dollar from investors. Meanwhile, investors are turning their attention to the upcoming release of the U.S. CPI data and speeches by Federal Reserve officials, hoping to glean more clues on the direction of Fed policy.
Since Trump's election victory, expectations have grown that he might adopt tough trade policies, especially after recent media reports suggested that Trump might re-nominate trade hawk Robert Lighthizer, heightening concerns over tariff policies and further weighing on the euro. The euro fell 0.64% against the dollar on Monday, closing at $1.0648, and at one point touched 1.0628, its lowest level since April this year. Technically, the 21-day Bollinger Band range on the daily chart is expanding, with short-term moving averages trending downward, indicating persistent bearish signals.
Meanwhile, the strong dollar trend continued, with the dollar index rising 0.52% to 105.5 on Monday, reaching a high of 105.70 since July. Last week, following Trump's election, the dollar index surged more than 1.5%. The market widely expects that Trump's trade and tax cut policies may drive inflation and U.S. Treasury yields higher, thus limiting the Fed's easing space and supporting a strong dollar.
The dollar also maintained its strength against the yen, rising to 153.71 on Monday, as the stance of Bank of Japan policymakers remained uncertain about when to raise rates, boosting the dollar. The rise in U.S. Treasury yields also fueled demand for the dollar, with the current two-year Treasury yield at 4.283% and the ten-year yield at 4.333%.
As for the GBP/USD, the price showed pressure, closing at 1.2867, as the market closely watched the upcoming UK employment data. Technically, the pound shows weak momentum, with the moving average system declining, presenting downside risks.
On a macro level, global markets are closely watching the policy direction of the new U.S. administration, particularly tariff policies, which could have a lasting impact on the dollar, euro, and other major currencies.
