Market Analysis

The US dollar is recording modest gains


The US dollar is recording modest gains against the euro during early Monday trading. After hitting a two year low last week, the Dollar Index has since rebounded, albeit not significantly. The pause in the greenback’s decline was due to technical factors rather than a change in the circumstances that dictated the sharp losses of the last few weeks. The general trend for the American currency continues to be one of decline, with the COVID pandemic out of control in several states, dampening hopes of a quick economic recovery, forcing the Fed to maintain its accommodative stance and diminishing the appeal of dollar denominated assets.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader


The first trading session of August opened with a mixed trading stance for European contracts, mirroring the trend seen overnight on Asian markets. Increasing coronavirus cases in the US, Latin American and BRIC countries mixed with growing fears of a second wave in Europe continue to be worrisome for investors as it could seriously stall the economic recovery. In addition, President Trump’s recent threat to Chinese-owned software companies in the US further escalated tensions with Beijing, which inevitably weigh on market sentiment today.

Technically speaking, the current lateral market consolidation on stocks isn’t yet threatening the mid-term bullish trend yet as prices haven’t broken any significant support zone, despite the correction. The upside risk remains alive but investors will need further fiscal and monetary support from lawmakers and central banks in order to sustain risk appetite in the near term. Having said that, most market operators are likely to be particularly attentive to today’s speeches from Presidents of the Federal Reserves of St. Louis, Chicago and Richmond, in order to get more clues on the Fed’s next move.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader


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