The USD is in a bear market. Japan’s yen has defied fates by not caving into interest rate differentials, which would have sent USD/JPY significantly higher than its current 106. Still, political scandal, lingering risk aversion and the expected removal of Abenomics has traders forecasting a stronger yen. Meanwhile, German price-index figures released today suggest the European Central Bank might be too relaxed about inflation. Expectations were that inflation would remain around 1.5% through 2018, but it looks as if the rate might be accelerating. If so, the ECB is likely to end its loose money policy by September, which would spike the EUR/USD. In the home of the USD, worries about the collapse of the North American Free Trade Agreement are declining. Mexico’s peso is the clear winner in Q1, benefitting from higher oil prices,
By Peter Rosenstreich
