Over the past month, the greenback has strengthened against all currencies of the G10 countries, except for the yen, which, like the US currency, acts as a defensive asset. The dollar also went up against a basket of currencies of developing countries, which fell by 1.9% over the last month.
According to some experts, the USD index can break up the current range amid the aggravated trade dispute between the United States and China
In particular, this view is held by investment fund specialists, who believe that markets now underestimate the risk of a protracted trade war, which will increase the demand for defensive assets in the context of a slowdown in the global economy.
According to them, the obvious solution would be short positions on the alleged outsiders - currencies of developing countries from Asia to South America, which are most sensitive to risk perception.
"Frankly speaking, I thought that the greenback would be strengthening much faster, as the markets laid the idyllic scenario of the development of events into quotes, and they were clearly mistaken. At the moment, I would be taking long positions on the US dollar against EM currencies," said Steven Miller from the venture capital firm GSFM.
Against the backdrop of escalating trade tensions between the two largest economies in the world, GSFM favors the US currency after Societe Generale and Kapstream Capital. Although Washington and Beijing intend to continue negotiations, investors do not seem to expect a speedy resolution of the problem.
The material has been provided by InstaForex Company - www.instaforex.com