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With the USD slipping, has the AED topped?

30th May 2016 | Dubai

Written by Jameel Ahmad, VP Market Research at FXTM

As the financial markets unwind for the final days of trading this month, the USD has been seen as the major loser of the financial markets for May. The USD has slumped lower against the overwhelming majority of its trading partners throughout the month following the controversy surrounding President Trump and his sudden dismissal of FBI Director James Comey, which resulted in market expectations turning negative on the Greenback.


With the negative USD sentiment in mind, the question has to be asked as to whether the AED could have possibly topped against its counterparts? My personal opinion is that there is going to be an air of uncertainty surrounding the USD for some time, therefore there is reason to support the view that the Dollar itself has reached a “top” and this will be the same for those currencies pegged to the Dollar.


The international view is that the EU economy is finally looking like it has turned a corner, which is going to encourage further buying interest in the Euro and consequently means that the AED could slip against the Euro. I am currently neutral on the Japanese Yen, although a lack of optimism around the likelihood that Trump will be able to push forward his legislative reforms will reopen the debate over whether the Yen will once again benefit from safe-haven buying during the second half of 2017.


The one currency where I think there are prospects for the AED to move higher is against the British Pound. This is mainly because the market is still seen as being bearish on the Pound with an impending General Election just under two weeks away representing another political risk and the prolonged Brexit uncertainty remaining in the air.

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