USD/CAD Daily Price Forecast – Ichimoku Clouds Hover Over The Loonie

After the last day attempt for an upliftment to breach the 1.3395 resistance level, the loonie pair today remained near 1.3320/40 levels. The USD/CAD had already touched the strong resistance level of 1.3338 levels in the morning session.

During the Asian trading session, the majority of the candlesticks had longer upper shadows than the lower ones showing strong buyer dominance.

Following the Russian President Vladimir Putin’s comments on resuming oil production from June 2019, the crude prices had fallen reaching $63.80 per barrel. However, Crude Oil WTI Futures upsurged amid OPEC-led supply cuts, geopolitical pressures rise on Libyian violence, and tightening of US sanctions on Iran and Venezuela. Hence, Crude prices initiated rebound to its five-month tops after previous small dips.

Global tensions deepened over concerns for a probable EU-US trade war. US Index may face severe consequences from the EU front if Trump confirms an official tariff imposition on the European goods.

Key USD/CAD Impacting Events For Today:

12:30 GMT (Mid Volatile)

US Bureau of Labor Statistics will release the US March CPI (YoY and MoM) and CPI Core figures. The Street analysts expect the Core CPI to record ten pips above the previous 260.99. On the CPI front, both YoY and MoM, consensus take on a bullish stance on the numbers.

14:30 GMT (Low Volatile)

The Energy Information Administration (EIA) will release the US weekly crude oil stock change since April 5. The consensus estimates the number to come around 2.513 million than the previous 7.238 million.

18:00 GMT (Highly Volatile)

The Board of Governors of the Federal Reserve will publish the Federal Open Market Committee (FOMC) Minutes report. The report is crucial in providing upcoming Interest rates and analyzing the risk to the various US long-term economic goals.

18:00 GMT (Mid Volatile)

The US Financial Management Service will broadcast the Monthly Budget Statement. The budget provides the status of the government debts and receipts for March, and this information is crucial in analyzing the movement of USD. The analyst consensus expects the numbers to come around negative $180 billion than the previous negative $234 billion.

Technical Analysis

USDCAD 15 Min 10 April 2019
USDCAD 15 Min 10 April 2019

The Ichimoku clouds hovered above the loonie pair. The baseline and the conversion line stood almost aligned along with the USD/CAD. However, there appears a bearish sentiment in the pair based on the Ichimoku cloud strategy. The 21-day Simple Moving Average (SMA), 55-day SMA, 100-day SMA, and 200-day SMA lied above the USD/CAD developing bearish stance on the pair’s future movements. The Relative Strength Index (RSI) showed lower momentum at 06:00 GMT drifting near 50 levels.

USD/CAD Daily Price Forecast – The Loonie Pair Heads Low Amid EU-US Trade War Fears And Crude Upsurge

The loonie pair continued to stay in the consolidation mode during the Tuesday trading session. The pair remained sustained in the range of 1.3290 and 1.3324 levels despite skyrocketing crude prices.

The Crude Oil West Texas Intermediate (WTI) Futures remained capped within

$64.80 per barrel. WTI futures traded near $64.55 per barrel at 06:15 GMT.  The increasing geopolitical issues boiling in the Libyan region (OPEC member) had put heavy pressure on the country’s oil export. This decline in the crude supply uplifted the commodity price to a five-month high on the previous day.

The New US-Euro Trade War

By April end, the US and China are expected to solve their disagreements and frame a proper trade deal. The global economy had suffered a lot due to the Superpower dispute. As the US-Sino trade war is about to wind up, US Prez Trump sets ready for a new tariff war.

This time it is with yet another Superpower – “Eurozone”. Reports suggested that the US administration is preparing to impose fresh tariffs on $11 Billion of EU Goods. This negative news has left the investors unnerved as fears of economic slowdown is further elevated.

The US Dollar Index that computes the greenback against the six major rival currencies seemed to remain stabilized near 96.90 levels. If the global tensions worsen over time, the loonie pair can have a significant impact on its future movements.

Crude prices, however, upsurged in the middle of rising global trade issues, frequent OPEC supply cuts, and US sanctions on Iran and Venezuela.

Key USD/CAD Impacting Event Lined Up:

20:30 GMT

The Weekly Statistical Bulletin (WSB) records data on refinery and four significant petroleum products. The American Petroleum Institute (API) will issue WSB filed until April 5. The Market analysts are away from any estimates while the previous statistics were at 2.963 million.

Technical Analysis

USDCAD 15 Min 9 April 2019
USDCAD 15 Min 9 April 2019

The loonie pair had an overall bearish aspect during the day. After plunging last day, the USD/CAD remained in the consolidation phase in the lower vicinity near 1.3300 level. The major Simple Moving Averages (SMA) computed for 21-day, 55-day, 100-day, and 200-day lied above the USD/CAD displaying bearish sentiment to the pair. The Keltner Channels (KC) showed the pair to remain between the bottom channel bound and the Exponentially Moving Average (EMA) adding to the bearish call for the future movements of the pair.

EUR/USD Daily Price Forecast – The Euro Pair Maintained Multiple Consolidation Phases

The Euro pair seems to remain in the consolidation region between 1.1255 and 1.1275 levels as it headed up to knock off the upper vicinity on Tuesday morning trading session.

EUR/USD rose underpinned US Dollar Index slump. The index had fallen over rising global tensions and elevation in its rival currencies weighed against it. The Australian dollars, Canadian dollars, and other major currencies upliftment on the back of crude upsurge. The crude oil was hovering at its five-month tops.

Today at 01:30 GMT, Australian February Home loans recorded a positive 2.0 percent in comparison to the consensus estimate of a negative 2.0 percent. This AUD event added more fuel to the USD Index plunge thereby elevating rivals including EUR/USD.

The US Dollar Index was trading near 97.01 levels during the Asian session.

A few moments ago, Swiss March MoM Unemployment numbers came around in-line with the market expectation of 2.4 percent. The EUR/USD dropped from 1.1263 level and went beyond 1.1260 level following the event.

On the Brexit front, EU Summit will take place tomorrow. EU Officials will then address on May’s request for an additional Brexit extension.

Today’s Key EUR/USD Influencing Events:

08:00 GMT

The National Institute of Statistics will publish the Retail Sales (YoY) and (MoM) for February. The report assists in tapping consumer expenditure for Italy. The consensus estimates YoY Sales to come 1.2 percent lesser than the prior 1.3 percent. The Market analysts expect 0.4 percent less for MoM Sales than the previous 0.5 percent.

20:30 GMT

The American Petroleum Institute will issue the Weekly Statistical Bulletin (WSB) since date April 5. The stats will provide data on refinery and four significant petroleum products. The consensus has no estimates while the previous stats were at 2.963M.

Technical Analysis

EURUSD 15 Min 9 April 2019
EURUSD 15 Min 9 April 2019

The euro pair was trading above the significant 100-day SMA (Simple Moving Average) and 200-day SMA, developing some bullish stance for the pair. The pair had uplifted for the last two days and was remaining under consolidation phase at the time of writing this article (06:54 GMT). The EUR/USD created new month high in the morning session. On the flipside, there are strong support lines at 1.1210 level and 1.1184 level, to protect downfalls if any. RSI (Relative Strength Index) remained in the range of 40 and 60 levels. The pair expected to sustain consolidated at the upper vicinity.

USD/CAD Daily Price Forecast – The Loonie Pair Broke Previous Strong Support Line of 1.3370

The Loonie pair extended the Friday’s consolidation phase into the Monday trading session. USD/CAD remained sustained in the upper vicinity of 1.3370 and 1.3380 levels.

Most of the candlesticks during the Asian trading session had longer upper shadows and shorter lower shadows which denotes buyer domination. The loonie pair created a fresh daily high of 1.3393 level as well as a new daily low of 1.3370 level during the early session.

USD Index continued its two-day downward rally reaching 97.21 level at 10:30 GMT. The index is heading to the strong support level of 97.19 level. The US Dollar Index had fallen over rising concerns on geopolitical issues in the Libyan grounds vis-a-vis the US.

The EUR/USD pair had jumped in the morning session after the release of positive German Trade balance report. This upliftment in the rival currency also weighed down the greenback.

Burgeoning Crude Prices

The OPEC’s continued supply cuts have moved the crude prices up reaching a 5-month high. The continued Military conflicts in Libya is making the country’s crude to go offline. The supplying capacity of the country is over 1 million barrels a day which got undermined. Supply of oil is falling short of the demand which is the crucial factor behind influencing the barrel cost.

This upsurge has elevated the commodity-linked currency Canadian Dollar, thereby pushing down the USD/CAD.

The pair’s future movements will rely on the US and CAD events to happen later the day.

Key USD/CAD Influencing Events Lined Up For Today:

12:15 GMT

The Canadian Mortgage and Housing Corporation will publish the Housing Starts s.a (YoY) for March. The report taps data about the number of new houses constructed. The consensus estimates a high reading of 193.0K than the previous 173.1K.

12:30 GMT

Statistics Canada will issue the February Building Permit for new construction projects.

The report is crucial because if there is any increase or decrease in the number of projects, it will impact the CAD. The Market analysts are expecting a bullish stance over the Permit with 0.2 percent than the previous -5.5 percent.

14:00 GMT

The US Census Bureau will publish the Factory Orders (MoM) for February month. The report calculates the total orders of durable & non-durable goods. It is an important economic indicator as it provides status about the manufacturing sector. The consensus estimates a decrease in the numbers to come around -0.6 percent to the previous 0.1 percent.

Technical Analysis

USDCAD 5 Min 8 April 2019
USDCAD 5 Min 8 April 2019

The 21-day Simple Moving Average (SMA), 55-day SMA, 100-day SMA, and 200-day SMA lied above the loonie pair. This position of USD/CAD shows some strong bearish movements for the pair. The Relative Strength Index (RSI) was hovering below 40 levels. The USD/CAD had broken the strong support line of 1.3369. The overall sentiment as per technical analysis is bearish, but the loonie seems to act resilient and sustain range-bound movements.

USD/CAD Daily Price Forecast – The Loonie Pair Stabilizes Ahead Of US Non-Farm Payrolls & Canadian Unemployment Reports

The Loonie pair started on the Friday’s trading session at around 1.3360 level. The pair later slipped reaching 1.3355 level where it remained in the consolidation mode during the Asian session. USD/CAD tumbled thereon in the middle of rising crude prices. West Texas Intermediate(WTI) remained above $70 per barrel level which is the highest since YTD. This upsurge in the crude prices led to the uplift in the commodity-linked Canadian dollars thereby pushing down the loonie pair.

US Treasury Bond Yields rose to new levels albeit didn’t reflect on the USD Index’s performance during the day. However, the USD Index shifted gears and got elevated on positive US-Sino news. Reports revealed that the trade talks are at the last stage and the deal is expected to get signed soon.

Key Influencing USD/CAD Events Lined Up For The Day:

12:30 GMT (Highly Volatile Event)

The US Department of Labor will publish the March Non-Farm Payrolls, and it will identify the change in Payroll. The difference in these numbers will tend to impact the Forex Board. The consensus estimates a higher number to 180K than prior 10K.

12:30 GMT (Highly Volatile Event)

Statistics Canada will release the March Net Change in Employment, and this data will signify the number of employed people in Canada. The consensus estimates the Change to 1.0K than the previous 55.9K.

12:30 GMT (Highly Volatile Event)

Statistics Canada will publish the Unemployment Rate, and it will provide the number of unemployed people in the country. The higher rates exhibit weakening of the Economy. The Consensus is in-line with the Rate estimates to 5.8 percent.

12:30 GMT (Mid Volatile Event)

The CAD Statistics will release the March Participation Rate, and it will indicate the total Labor Force above 15 years. The Market analysts expect a decrease in the Rates to 65.7 percent across the previous 65.8 percent.

12:30 GMT (Mid Volatile Event)

Statistics will broadcast the March Average Hourly Wages (YoY), and this report will examine the increase in income of the Canadians. The previous Average was 2.25 percent.

Technical Analysis

USDCAD 5 Min 5 April 2019
USDCAD 5 Min 5 April 2019

The USD/CAD broke the strong resistance level of 1.3367 reaching 1.3369 level at 10:40 GMT. The loonie pair was trading above the 21-day SMA (Simple Moving Average), 55-day SMA, 100-day SMA and 200-day SMA showing bullish stance on its future movements. The pair remained in the vicinity between the upper bound of the Keltner Channel and the EMA (Exponentially Moving Average) showing signals of an uptrend. RSI (Relative Strength Index) displayed majorly sustained within the standard range of 30-70 levels.

USD/CAD Daily Price Forecast – The Loonie Pair Flies On Crude Upswing

The USD/CAD extended the last day’s uptrend rally into the Thursday’s trading session. The loonie started off the day near 1.3344 level. Thereon, the pair went uplifting without getting undermined until 1.3369 level. Most of the candles seemed to have longer shadows showcasing buyer and seller dominations.

The primary rationale behind the loonie pair upsurge was the decline in crude prices. Oil prices had slipped on the Thursday morning after a report revealed unanticipated oil inventory numbers. West Texas Intermediate (WTI) Futures dropped 0.14 percent reaching $62.37 per barrel. Brent Oil Futures settled 0.1 percent lower in the morning reaching $69.27 per barrel.

However, when the bigger picture of a year is taken, WTI is 35 percent up, and Brent is 28 percent higher. These price hikes are mainly due to the US sanctions on countries like Iran and Venezuela and the regular supply cuts from the Organization of Petroleum Exporting Countries (OPEC).

“Positive rhetoric regarding a U.S.-China trade deal could continue supporting crude, and even lift it higher from here,” said Tariq Zahir, managing member at the oil-focused Tyche Capital Advisors fund in New York.

At the time of writing this article (12:06 GMT), the loonie pair was trading at 1.3350 level.

Key USD/CAD Events To Have A Close Scrutiny:

12:30 GMT

The US Department of Labor will publish the Continuing Jobless Claims (CJC) and the Initial Jobless Claims (IJC) which provides the status of the US Labor Market. The CJC considers the number of unemployed and people receiving unemployment benefits. Market analysts estimate the figure to come around 0.006M lower than the previous 1.756M. The IJC is issued weekly and provides data about the people who are first timers in availing unemployment benefits. The Market analysts take on a bearish stance on the IJC with the consensus estimate of 216K to the prior 211K.

14:00 GMT

Canada’s Ivey School of Business will release the March PMI which provide data relevant to economic conditions. The previous PMI market data was 48.9 percent while on the PMI s.a.the consensus estimate of 51.1 points against the last 50.6 points.

14:30 GMT

The Energy Information Administration (EIA) will publish the US Natural Gas Storage Change report. The report is an estimated data based on a monthly survey since March 29. The Market Analysts expect an increase in the Gas volumes with 10B against the previous volume -36B.

Technical Analysis

USDCAD 5 Min 4 April 2019
USDCAD 5 Min 4 April 2019

The USD/CAD pair remained in the boundaries of the Keltner channel (KC). The USD/CAD pair shown no distortion in the KC. The pair stayed majorly on the upper vicinity between the upper bound of the KC and EMA revealing great signs of a sustained uptrend. However, while drafting this article (12:06 GMT), the pair was drifting near the lower side of the KC. The 200-day SMA, 100-day SMA, 55-day SMA, and 21-day SMA lie above the USD/CAD allowing the bears to rule the pair’s upcoming movements. The Relative Strength Index (RSI) showed the graph to stay within the standard range of 30-70 levels.

USD/CAD Daily Price Forecast – The Loonie Sandwiched Betwixt Weaker DXY And Higher Crude Prices

The Loonie pair set fresh lows for the week after making a recovery trial last day. USD/CAD started the day at 1.3344 level and later slipped consistently reaching 1.3295 level. There was hardly any upward movement for the USD/CAD during the Asian trading session. If it continues to downtrend, the pair will undoubtedly encounter the March strong support levels present in the vicinity of 1.3274 and 1.3255.

USD Index (DXY) had fallen drastically from 97.29 level reaching 96.96 level since the morning session. Reasons seem unidentified like how the greenback grew stronger last day over weaker Durable Goods Orders reports.  But this time DXY is experiencing severe pullbacks increasing the selling pressure on the currency index. However, US Treasury Bond Yields saw upliftment and US-Sino Trade talks gave a favorable status quo which must have elevated the DXY.

Upsurging crude prices led to additional stress to the USD/CAD. Crude Oil had knocked off new multi-month highs reaching $63 per barrel amid global tensions.

Investors will remain unnerved until the loonie pair takes a u-turn upwards.

Key USD/CAD Influencing Events Scheduled For The Day:

12:15 GMT (Mid Volatile Event)

The Automatic Data Processing, Inc of the US will broadcast the March Employment Change. The report will evaluate the change in the number of employed people in the US. A higher number may indicate an increase in consumer spending thereby encouraging economic growth. A Bearish expectation by the Consensus estimate with 170 K against the previous 183K.

13:45 GMT (Mid Volatile Event)

The Markit Economics will publish the PMI Services and PMI Composite on Manufacturing and Service sector for March month. The PMI is crucial to suggest overall economic conditions in the US. The Service sector is vital because it occupies a large share of US GDP. The Market analysts estimate stand in-line to PMI composite with 54.3 percent and PMI Service with 54.8 percent.

14:00 GMT (High Volatile Event)

The Institute for Supply Management (ISM) will release the March Non-Manufacturing PMI for the US. The Index will tend to reflect the status of business in Non-manufacturing sector. The market analyst is expecting a Bearish stand with 58.0 percent over the previous figure of 59.7 percent.

Technical Analysis

USDCAD 5 Min 3 April 2019
USDCAD 5 Min 3 April 2019

The pair saw a downtrend during the day reaching 1.3297 level. The Simple Moving Averages (SMA) for the major days lie above the loonie pair showing a bullish stance in the upcoming movements. The Moving Average Convergence Divergence (MACD) remained positioned in the lower vicinity of the indicator showing low buy signals. The Relative Strength Index (RSI) showed fewer signs of overbuying or overselling during the day.

Gold Opens The Week Positive, But Gains Limited Ahead Of Central Banks

Precious Metals opened the week with gains as investors are on a wait-and-see mode ahead of central banks announcements this week.

Gold, Silver, Copper, and Palladium are up on the day, while the Dollar index is testing critical support.

The dollar index is 0.10% negative on the day as the unit is now trading at 2-week lows around the 96.40 crucial support.

Global risk sentiment as a catalyst

Risk sentiment remains on the table as investors now think that a dovish Fed will fuel stocks market. However, a weak dollar is underpinning gold and other commodities.

In any case, experts are in wait-and-see mode ahead of the series of central banks’ monetary policy announcements this week.

From the Federal Reserve taking the lights on Wednesday, until the Swiss National Bank and the Bank of England having the baton on Thursday.

All banks are expected to take dovish stances with the Federal Reserve keeping the focus as it will release its new economic projections.

“The Fed’s interest rate and monetary policy decisions on Wednesday, as well as the Federal Open Market Committee’s new economic projections, will probably exert the most influence on gold prices this week,” FX Empire analyst James Hyerczyk highlighted in a recent article.

Policymakers could turn more dovish in the next days. It would be supportive for gold and other precious metals.

In this framework, commodities started the day with declines, but gold and silver recovered losses, and now they are posting gains.

Gold extends gains

XAUUSD Daily Chart Gold March 18

Gold is trading positive on Monday amid a weak dollar. Currently, XAU/USD is posting 0.26% gains so far today as it is pricing at 1,305.

The pair is now ready for a new test of the 20-day moving average at 1,308. Remember that this line rejected gold twice last week.

With a break above the mentioned moving average, gold will have open doors to the 1,320 area, where it would be able to build up another bullish leg. Then, check 1,330 and 1,345 as the new frontiers.

To the downside, a failure at 1,300 will send XAU/USD down to 1,290, where the next important buying area is. Below there, 1,280 is the critical level to watch.

Silver opens the week with gains

XAGUSD daily chart Silver march 18

Silver recovered initial losses on Monday to regain the 15.30 area and to trade as high as 15.40. A weak dollar and a positive correlation with Gold are the main factors contributing to these movements.

XAG/USD is currently trading 0.44% positive on the day at 15.35. On the middle term, silver is well supported by the 200-day moving average level at 15.12and by the 15.00 support area.

To the upside, 15.50 is the next resistance with 20 and 50 days moving averages between 15.50 and 15.60 levels.

Copper reclaims the 2.9000 area

Copper is trading positive on Monday as it is extending its Friday’s pullback from 2.85.

XUC/USD is now trading 0.63% positive on the day at 1.9170. The pair is trading sideways between 2.8550 and 2.9270.

Palladium approaches to its all-time highs

XPD/USD is trading positive for the sixth day in a row as palladium is approaching its all-time price against the dollar at 1,570.

The pair is now pricing at 1,561, 0.46% positive on the day.

Forex Annual Market Recap – 2018

Volatility returned to the currency markets in 2018. The prior year did not provide investors with fear and uncertainty the way 2018 did. The dollar was the main catalyst for changes in market sentiment. Exchange rates were relatively stable until the spring of 2018 and then it became clear that US yields would rise, sending the greenback higher. There were also some severe movements in emerging currencies. The Chinese Yuan weakened substantially along with the Turkish Lira. Moving forward, there are several factors investors should focus on. The ECB will play a key role in 2018, along with political events in both the UK and US.

The Strength in the Greenback

The dollar returned as the king of the currencies in the spring of 2018.  A new Federal Reserve chair began his tenure and quickly installed the belief that the Fed would continue to raise rates multiple times in 2018 and 2019. This led to a rise in US yields pushing the yield differential between major counterparts in favor of the greenback.

Fed Chair Powell’s continued to be hawkish throughout the year, and by October of 2018 the average Fed forecast confirmed the central banks’ intention to increase interest rates three more times in 2019, with another rate hike scheduled for December.  Fed chair Powell in the fall of 2018 said that monetary policy was still accommodative, and there was further to go before the Fed funds rate hit neutrality.  The hawkish tone of the Fed was repeated during the week before Christmas. The fed increased the Fed fund rates by 25-basis points and signaled some softening by forecasting an increase in interest rates by 50-basis points in 2019 instead of the 75-basis point forecast increase they had made during the fall. This was at odds with the market which forecast rates to fall in 2019.

The Dollar versus the Euro which is the most liquid global currency pair has a peak to trough move of nearly 10%. The increase in the value of the greenback might be curtailed by a less hawkish fed. The markets are signaling that rates have reached restrictive levels which might reduce dollar volatility moving forward.

EUR/USD 1y
EUR/USD 1y

 

One of the issues is the concept of neutrality. Coming out of the Great Financial Crisis, the Fed wanted to increase interest rates to the point where they had enough bullets to reduce rates should a recession occur. If the Fed left rates as very accommodative levels, then there would be no stimulus to help the economy if it began to falter.

The Fed also needed to unwind its asset purchases. The period of quantitative easing had ended, and the Fed began to wind down its portfolio. This strategy was put in place before President Trump was elected, and there has been continuity between recent Fed Chairs, during the last 10-years. The President has been ultra-critical of the Fed decision to increase rates during 2018. If this occurred in nearly any other country investors would have hammered the currency. Yields would soar as investors extract a steep price for criticism of the central bank.

Brexit Hampers Sterling

GBP/USD 1y
GBP/USD 1y

The pound was a big loser in 2018, as the issue related to Brexit started to heat up. The decline in the pound coincided with strength in the greenback which began in the spring of 2018. The GBP/USD had peaked to trough range of 13%.

During the fall of 2018 reports that the EU and the UK were having difficulty reaching an agreement started to generate headwinds for the GBP. Despite mixed data, some of which showed strength, the Bank of England was hamstrung by the Brexit issues. Ahead of the Christmas break, Prime Minister Terresa May reached an agreement with the EC but was told this would be the last agreement and there was no flexibility.  Unfortunately, PM May was unable to get the Brexit bill passed by the parliament. In fact, her own party the Tories held a no-confidence vote which May was able to survive. This will be revisited in early 2019, as the Brexit saga continues.

The Chinese Yuan Tumbles

The Chinese Yuan was one of the biggest movers during 2018. The peak to trough range was nearly 11.5%.  The currency began to weaken during the spring of 2018 as trade issue between the US and China began to heat up. There were multiple fits and starts and as of the year-end, the rhetoric between President Trump and President Xi continues. Initially, investors thought the weakening of the Chinese currency was a function of the People’s Bank of China’s efforts to offset softening exports with a weaker currency. This would make Chinese exports more attractive. During the latter half of 2018, Chinese economic data began to soften which was foreshadowed by the weakening currency. As of year, end Chinese PMI data moved into contraction territory which points to further contraction in the Chinese economy.

USD/CNY 1y
USD/CNY 1y

2019 Forecast

While 2018 was the year of the dollar, there are many issues that can change the narrative in 2019.  The Fed will likely change its tune and reduce the number of rate hikes to 1, instead of 2. US yields already reflect this scenario and should help reduce the value of the dollar. The global economy could continue to weaken which will weigh on the yuan and could further hurt the Chinese currency.

The markets have also failed to discount the volatility associated with political unrest in the United States. President Trump could be impeached which is likely, but nobody believes, the Senate will convict him. If this becomes the case, the markets could become very volatile and could generate significantly headwinds for the dollar. US yields, in this case, would decline instead of rising, making the dollar less attractive. At the same time, investors would be looking for a safe-haven currency which would likely be the yen and the Swiss Franc. Even if political unrest does not occur, a potential recession in the US would weigh on the greenback.