US Dollar Index shoots back over 83 as euro zone economy fears grow

The ICE US Dollar Index has shot back over 83 in trading on Tuesday as the euro zone’s economic fears once again grew after weak German data raised concerns about the health of the regions economy,
reviving speculation that the ECB (European Central Bank) could cut interest rates as early as next month.

Latest Dollar Index Rate

The ICE US Dollar Index, which tracks the US dollar against a basket of major world currencies was at 83.135, 07:35 GMT this morning, off open highs of 83.230. A stronger dollar tends to pressure commodity prices including oil and gold as they are priced in the currency.

Dollar v Euro

The last time the Dollar Index was firm at 83 was in the summer of 2012. Expect that any downward pressure on the euro to add further strength to the index as many investors and traders are now agreed that the shared euro currency is overvalued.

“A rate between $1.10 and $1.20 is reasonable over the next three or four quarters.” said Ken Dickson, investment director at Standard Life Investments, in Edinburgh, Scotland, commenting that the single currency should be significantly lower. Standard has had a short euro position for some time. The current rate is around $1.30.

The US dollar managed to hold onto gains against the euro as it was shown that American new home sales rose broadly in line with market expectations in March. In a report, the US Census Bureau said new home sales rose by 1.5 percent to a seasonally adjusted 417,000 units in March, compared to expectations for an increase to 420,000.

Following the release of the data, the US dollar held on to gains against the euro, with EUR/USD shedding 0.35% to trade at 1.3021.

In response to the European news one industry expert asserted: “The overall picture is pretty bleak. The likelihood of the ECB cutting interest rates increased today. All in all, it’s negative for the Euro.”

See the original post here: 
US Dollar Index shoots back over 83 as euro zone economy fears grow