US Dollar index rebounded sharply in the past few sessions after hitting twenty-seven months low of almost 92.14 against the basket of major currencies. Although the greenback moved back from previous lows, the market analysts believe the reserve currency needs a longer time for complete stabilisation.
The USD index is down more than 3% this year so far. It had hit 101 level against the basket of major currencies early this year.
Trader’s concerns over economic slowdown amid COVID-19 spread has significantly impacted the greenback in the past few months. The US dollar is down more than 6.5% against the euro.
“The shrinking of its interest-rate advantage makes the USD less appealing and pushes investors to consider deposits in other currencies. These cyclical factors won’t turn around in a hurry and the US dollar likely has room to fall further,” JPMorgan Asset Management’s Patrik Schowitz said in a recent note.
Several other analysts are of the opinion that the US dollar is likely to struggle in the short-term as faster economic recovery is doubtful. Indeed, the pundits have started raising questions over the dollar’s potential to sustain its safe-haven status.
“The prospect of the dollar retaining its perceived safe-haven status is another concern. We are weighing these as a contentious U.S. presidential election looms,” BlackRock strategists wrote.
Gold, on the other hand, surged sharply in the past few months amid weaknesses in the US dollar along with the tumbling US economic situation. The yellow metal is currently trading slightly below the $2000 level, but bulls claim that gold prices will move higher due to the weak US dollar fundamentals. You could take advantage of this price action with AvaTrade.
Euro slid on Monday from two years high against the greenback. However, the market sentiments are strong for common currency despite lower than expected eurozone PMI data. The eurozone PMI index came in at 51.6 this month from 54.9 in July.