The US dollar suffered a strong liquidation in the early European session on Monday, amid doubts about the strength of the economic recovery, and before the Federal Reserve meeting later this week.
At 10:10 GMT, the US dollar index fell against a basket of 6 currencies, and the decline was by 005% to 93.907, to trade at the lowest levels since May 2018.
In other news, currency pairs fell as follows: (USD / JPY) fell 0.6% to 105.53, falling to 4-month low levels, (GBP / USD) rose to 1.2820, 0.3%, to 4-month levels High. However, the EUR / USD pair rose 0.5% to 1.1708, after reaching a 22-month high early.
The dollar is being subjected to multiple strikes, including the China-US conflict, the uncertainty about the upcoming presidential election. But the biggest source of fear is the economic recovery of the American economy from the repercussions of the Corona virus, as it struggles to adapt to the second wave of the virus.
The United States has recorded or increased in jobless claims since March, due to the increasing number of states making the decision to undo the opening of the economy amid increasing casualties.
“The important statement indicated that the US economy has recovered in the past weeks,” Danske Bank analysts said in a research note. And they continued: “PMI indicators for July confirmed this picture, with the PMI for services sector showing further improvement, but deflation remains the master of the situation, unlike in Europe.”
On Thursday, we await a first US glimpse of the gross domestic product released by the US Department of Commerce, with analysts forecasting a 34% decline year-on-year in the first three months. Later in the day, we’ll wait for the Durable Goods data for June.
Fed members meet this week, at a two-day meeting, which ends on Wednesday, amid expectations of an increase in Federal Reserve support programs.
The state of emergency that started with the appearance of the Coruna virus has now ended, “and the second phase comes to support the economy, especially the recovery alone,” the Fed chiefs said in recent days. Morten Lund, of Nordea, says in a research note. “Bernard says in a research note that the focus will be towards shifting from stability to facilitation. What tools should he use, and which will appear to be a turning point.”