The second week of the ongoing invasion of Ukraine seems to have impacted the forex market for the Euro and other European currencies as well. The US dollar keeps a steady rally against, particularly against Europe and Japan, according to the US Dollar Index. The uncertainty of political alliances and the cutting short of resources from one of the major exporters from Europe, that is, Russia, are assumed to be the cause for the currencies hitting the lowest point in several years.
It has been mentioned often that Eastern European countries, especially Russia, have been one of the primary sources of energy for the rest of the continent. So, the war that is currently devastating Ukraine has had its impact on Euro and other currencies, including the Great Britain Pound, Swiss Franc, and the Japanese Yen as well. Accordingly, the US Dollar Index that tracks the movements of several countries against the USD has reported that the dollar has soared close to a 22-month high. The 0.27% hike on the 5th of March has brought the score to a solid 98.933. In the opinion of the best fx brokers, this dip could open up new avenues for profit in the forex market. You can browse the best forex broker in USA platforms and make decisions accordingly
The reason for such belief comes from the surging price actions in the last few weeks. The JPY climbed 10 BPS against the USD on Saturday thanks to the increasing demand. The Chinese Yuan has also been performing well recently, thanks to a 16.3% year-on-year increase in exports. The country’s imports stay below the rate of exports at 15.5%, and the year-on-year trade balance is at $115 billion. All these led to significant, although not impressive, growth of 0.06% against the USD.
The twins from the Southern Hemisphere, the AUD, and the NZD, have edged up 62 BPS and 48 BPS, respectively. Australia’s coal as a replacement for Russian energy posted a 70% increase in the last few weeks. Moreover, the wheat prices have helped the AUD to reach its highest position in about four months with a 10% climb against the EURO. Although the NZD, too, looks solid with a 2-month high, this position is subject to the impacts of this ongoing war between Russia and Ukraine.
On the other hand, we have the GBP/USD pair that lost 12 BPS to reach 1.3209. While the Euro hit the lowest since 2020 at 1.0636, the Swiss Franc dropped to its lowest position since 2015. Europe’s dependence on Russia for energy has heavily affected the price, according to experts. This ban on Russia would add to the impacts of the pandemic on the currencies and probably hit newer bottoms. On top of that, investors are expecting the policy decision from the European Central Bank to see how it might reroute the economy. The USD meanwhile looks hale and hearty with a 0.4% edge against the Franc and 0.3% against the Yen.