As a result of Monday, the US dollar received support, but according to the dynamics of its index, ICE as a whole remained in the "outset", consolidating for the third day in a row.
The behavior of the dollar can be explained by several reasons, both fundamental and situational. It still supports the process of raising the interest rates of the US Federal Reserve, as well as its withdrawal from the financial system by reducing the balance of the regulator, which contributes to the growing deficit of the dollar supply in the market.
Another major situational reason is the factor of uncertainty, which is produced by the United States in the form of a trade war between Washington and Beijing, as well as other smaller conflicts. Here, the US currency is already in demand as a safe haven asset.
There are also a number of other factors that constrain the strong strengthening of the dollar. This is D. Trump's ongoing attacks on the Fed, indicating its dissatisfaction with a strong dollar. Then political instability in the United States itself due to a split in society and rejection, approximately, by half of Trump as president. The upcoming congressional elections contain some intrigue that can both negatively and positively affect the rate of the US currency.
So far, America's economy is generally very, very positive, which contributes to the demand for dollar-denominated assets, but if the local stock market continues to decline and enters a full-fledged bearish phase, and the political struggle inside the country only intensifies, then the dollar may be under pressure, and noticeable. In previous economic and geopolitical crises, the dollar was perceived as a safe haven precisely because of stability inside the country, but times have changed. The American society is split, which frightens market players, forcing it to behave with restraint towards the dollar purchases, which is reflected in its behavior, which is expressed in the protracted process of consolidation.
While the Fed will continue to raise borrowing costs and reduce its balance, and other central banks do not seek to tighten monetary policies, the dollar will be in demand.
Today, market attention will be paid to the publication of eurozone GDP data, as well as the values of consumer inflation in Germany and the index of consumer confidence from NE in the States.
Forecast of the day:
The EUR / USD currency pair is trading below 1.1390, consolidating in anticipation of the publication of data on consumer inflation in the eurozone and employment in the United States, which will be released on Friday. If the pair fails to grow above 1.1390 and gain a foothold, then it may not continue to decline to 1.1300.
The EUR / GBP currency pair is trading below 0.8895. The pair is supported by the unresolved problem of Britain's exit from the EU, as well as the apparent slowdown in economic growth in the UK. Following the meeting of the Bank of England, which will be held this week, the pair may continue the upward trend to 0.8935, breaking the level of 0.8895.
