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Dollar trims yesterday`s losses, but still seen vulnerable

News Date: 28/3/2017 03:41:12

The US dollar rebounded on early trades, attempts to offsetting yesterday's heavy losses as concern over US President Donald Trump's failure to legislate a health care program sparked fears about his ability to legislate other fiscal policies.

At 03:48 GMT, the USDIX is floating near the opening price of 99.05 after falling yesterday to a low of 98.66.

The US dollar continues to suffer from negative pressure with speculation that Trump will not be able to legislate other fiscal policies, such as tax cuts and infrastructure spending, which investors in stocks markets are hoping for.

Yesterday, the Dow Jones fell nearly 200 points in early trading, but reversed the losses at end trading to around 45 points, down to 20550.98 levels.

Investors have re-evaluated the bad news about the health care program already, as there are a different views, it could be an incentive for Republicans to do better with tax reform.

The US dollar is unlikely to fall in one direction, as Republicans can not face mid-term elections on November next year without taking a single fiscal stimulus.

The weakness of US and global equity indices drives investors to buy low-yielding currencies as a safe haven. The Japanese Yen is at the top of these currencies. Yesterday, the USD / JPY pair sharply fell, reaching new lows of 110.10.

The US Dollar fell 0.27% to levels around 110.56 against the Japanese Yen.

The beginning of the improvement in sentiment in the stock markets will ease the negative pressure on the pair, which will push it to trim the losses recorded during the last few days.

The euro rose after economic data showed German business climate index grew better than expected in March, boosting expectations for the euro zone's biggest economy to grow at an accelerated pace in the coming period, leaving the door open for the ECB to raising interest rates.

The Euro is trading around the opening price of 1.0866 against the US Dollar.

The euro was also boosted by the victory of German conservatives led by Chancellor Angela Merkel in the regional elections in the western state of Saarland on Sunday, boosting the likelihood of a fourth-term victory by the Conservatives in September's national elections and reducing the chances of their rival Social Democrats.

The pound settled around 1.2560 after rising yesterday nearly 1% to reach the highest level in eight weeks at 1.2615, as the UK's exit from the European Union triggering on Wednesday, but markets are becoming accustomed to the idea of ​​a UK exit from the EU in due course. It is unlikely to have a significant impact on the pound sterling.

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