US Dollar may rise in favorable May
The US Dollar (USD) declined on Forex for most of April amid investor confidence in the global economic recovery.
However, May has arrived-historically the most favorable month for the US currency in the year.
USD has not grown against other reserve currencies for a month — a record long time since last summer, writes the Financial Times. This is a consequence of investors' optimism about the pace of global economic recovery after the pandemic.
In April, amid the acceleration of vaccination rates in the EU and growing optimism about the global economy, US Dollar Index lost 2.7% of its value, while currencies linked to commodity assets showed the greatest growth.
Meanwhile, May is traditionally the most favorable month for Dollar in the year, according to ANZ Bank.
According to the bank, the DXY dollar index historically shows the strongest dynamics in the recent month, and the worst month of the year for the US currency is April.
On Friday, we already saw a corresponding hint, when EUR/USD on Forex fell by a record for more than a year, thanks to the rebalancing of portfolios, timed to the end of the month. All this helped the DXY to return above the 100-day MA.
The end-of-month pull to USD and the April profit-taking on raw materials and stocks on Friday showed up in full force. However, the strengthening of the dollar does not go beyond the technical correction rebound after a month-long decline. The continuation of the trend for the sale of the US currency on growth can return to the game this week.