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The dollar tried to extend its gains Wednesday May 5th amid talk of a possible US interest rate hike and a wave of tech stocks selling undermining risk appetite.
Yesterday’s recovery in the dollar pressured the euro, which fell to $1.2021 and threatens to break an important support range between $1.1995 and $1.2000.
Against a basket of currencies, the dollar was little changed near 91.21, but it is far from its lowest level in two months, which it recently struck at 90.422. The dollar needs to overcome the resistance at 91.425 to continue its recovery.
The recovery came after US Treasury Secretary Janet Yellen’s remarks that there might be a need to raise interest rates to prevent the economy from inflationary growth.
Later, the comments were softened, but the simplest sign of tightening monetary policy is severely affecting the markets that have become too dependent on monetary stimulus.
The impact was evident on the shares of large-cap technology companies that suffered heavy losses overnight, sending the Nasdaq index down 1.88%.
Trading was limited in Asia due to a holiday in Japan and China, but the New Zealand dollar rose to $0.7170 after the jobs data came in stronger than expected. The dollar settled against the Japanese yen at 109.31 yen.
