The US Dollar’s strength has started to wear thin as technical indicators warned that its recent surge was overdone, slowing its encroachment on the biggest quarterly gain in three years. As a result, both the New Zealand Dollar and the Japanese Yen have strengthened Wednesday against their USD counterpart. This follows William Dudley of the Federal Bank of New York’s President expressing concerns that a stronger US currency may hurt US growth overall.

The USDJPY lost 51 pips from Wednesday’s high of 108.95 down to lows of 108.44. The currency pair currently sits on 108.64, having fallen a total of 22 pips from the time of open.

The Yen strengthened after Prime Minister Shinzo Abe reportedly wants to be “careful” about the impact on local economies from the recent weaknesses making themselves apparent in the currency. The USDJPY has since the start of its bullish behaviour, risen 749 pips until its drop today.

The Kiwi Grows as Trade Deficit Shrinks

The Kiwi climbed from its lowest point since March, whereby it met its support at 0.8074. Today it opened at 0.8045 and climbed to its current position at 0.8082, after a government report unexpectedly showed that New Zealand’s trade deficit contracted last week.

The NZDUSD rose 47 pips thus far, nearing making up for its 74 pip drop on Monday, however it still seems to be in line with its continuous downward spiral against the greenback. If the USD keeps this sentiment though, the NZD could enjoy a sustained success against its American counterpart.

 Today’s Focus

EUR 09:00am GMT (+DLS): German Ifo Business climate measures the level of a composite index based on the surveyed manufacturers, builders, wholesalers and retailers.  The number is expected to contract from the previous figures of 106.3 to the predicted 105.9.

USD 3:00pm GMT (+DLS): New Home Sales measure the annualised number of new single-family homes that were sold during the previous month. This figure is expected to grow from the previous figures of 412K to the expected 432K.