Euro and Sterling Soars as Dollar Falls to One-Month Low
The US dollar has been under pressure since the beginning of this week as the greenback slumped for the fourth session in a row. The US Dollar Index (DXY), which measures the greenback against the major currencies, fumbled below 96 for the first time since June 10.
The US dollar fell due to the risk appetite mood. Investor’s optimism over the coronavirus vaccine and economic recovery negatively impacted the greenback.
The positive reports related to coronavirus vaccine along with economic recovery could improve investors’ confidence in equity markets and adds pressure on the US dollar in the coming days in analysts view.
British Pound, on the other hand, jumped against the US dollar on the back of improving risk sentiments. Sterlings also remained strong against the Euro. However, the market analysts are not seeing more gains for sterling amid economic weaknesses.
“From an FX perspective it is always about the relative, and we would argue that the relative macro position for the UK is looking grimmer than most other major economies. That will lead to further sterling weakness ahead,” said Derek Halpenny, head of research at MUFG.
New Zealand and Australian dollars also grew against the US dollar. The market pundits say the weaknesses in the US dollar is supporting gains for other currencies.
“The main driver here is from the U.S. dollar side,” said Commerzbank’s head of FX and Commodity research, Ulrich Leuchtmann.
“The market is questioning the dollar’s role as a safe haven in light of the economic damage the U.S. faces if it does not get the coronavirus pandemic under control,” he added.
The EUR/USD pair surged to the highest level since March 10. The traders are now watching the pair to break the next resistance level of 1.15.