The US Dollar Index bears increased their stakes the third straight week.
In the short term currency traders are concerned about the latest U.S Federal Reserve statement on the pace of the world’s largest economy and the dirty politics coming to play in the corridors of power at Washington, triggered with heightened geopolitical risks by President Trump’s alleged statement in the form of an election delay.
Such macros give the U.S dollar index little hope to stay above its critical support level of 93.5 where more global investors and currency traders in and accelerating fashion, throw aside the previously established assumption that the US will lead the global economic recovery.
The recent sell-off observed in the U.S dollar Index has reached levels last seen in mid-2018. On the present horizon, currency traders will watch the 93.00 zone cautiously, as any breach could result the greenback tracker to fall around the 91.80 support zone, leaving the negative stance on the dollar intact in the mid-term.
With the US dollar outlook extremely sour, foreign investors seems to move their attention to other safe haven asset options like gold.
Still, currency traders are betting that a continual outburst between the two leading economies, China and the United States, would trigger investors move into the recent forgotten safe haven currency.
Although the market appears to be desensitizing again, one never really feels sure of which US-China political powder keg is about to explode, especially with the US administration considering still naming China a currency manipulator. This macro is expected to reduce the bearish bias of currency traders in the mid-term.
Ultimately, currency traders will take a more strategic tack and soon begin to factor the probability of a return to globalization and a non-tariff approach to trade under a potential Biden Presidency.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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