FX Update – July 27 – USD tracks lower, again

<p><strong>The Dollar continues to drop, </strong>printing fresh trend highs against the Euro and other currencies. The narrow trade-weighted USDIndex (DXY) fell over 0.5% to a 22-month low at <span><strong>93.76</strong></span> in what is now the seventh consecutive day of decline and the fourth straight week the index has surpassed its prior-week low.</p>
<p><a href="https://analysis.hotforex.com/wp-content/uploads/2020/07/2020-07-27_12-03-33.png"><img class=" wp-image-154418 aligncenter" src="https://analysis.hotforex.com/wp-content/uploads/2020/07/2020-07-27_12-03-33-300×241.png" alt="" width="584" height="469" srcset="/wp-content/uploads/2020/07/2020-07-27_12-03-33-300×241.png 300w, /wp-content/uploads/2020/07/2020-07-27_12-03-33-768×616.png 768w, /wp-content/uploads/2020/07/2020-07-27_12-03-33-696×559.png 696w, /wp-content/uploads/2020/07/2020-07-27_12-03-33-523×420.png 523w, /wp-content/uploads/2020/07/2020-07-27_12-03-33.png 811w" sizes="(max-width: 584px) 100vw, 584px" /></a></p>
<p>Momentum has also been accelerating to the downside over the last week. <strong>EURUSD</strong> concurrently printed its loftiest level seen since January 2018 at <span><strong>1.1724</strong></span>. <strong>USDJPY</strong> fell by over 0.6% in pegging a four-month low at <span><strong>105.39</strong>.</span> <strong>AUDUSD</strong> and <strong>NZDUSD</strong> lifted by around 0.5% apiece, though both pairs remained off recent trend highs. <strong>USDCAD</strong> ebbed moderately, lacking impetus for a challenge of last Thursday&#8217;s seven-week low at <span><strong>1.3349</strong></span>. Front-month <strong>USOil</strong> prices are softer, but have so far remained within the range seen on Friday.</p>
<p><strong>Cable</strong> posted a near five-month peak at <span><strong>1.2858</strong></span>, despite losing about 0.3% against the Euro, Yen and Australian Dollar, among other currencies. The Pound&#8217;s laggard performance comes amid increasing signs that the EU and UK are only likely to strike a narrow trade deal, with the risk remaining that the UK might even leave the single market at year-end without a deal.</p>
<p>As for the Dollar, the currency is being down-weighted in portfolios, partly on the advent of the EU&#8217;s recovery fund, seen as a milestone by many analysts (a new liquid AAA fund that also reduces Eurozone breakup risks), and partly amid expectations for dovish guidance from the Fed at this week&#8217;s FOMC. There has been some speculation that the US central bank is considering yield curve targeting (which we don&#8217;t anticipate anytime soon).</p>
<p>Global stock markets continue to exhibit a flagging price action, being richly valued and as the pace of global economic recovery is flattening out somewhat, along with US-China tensions rising from simmering to bubbling. <strong>Gold</strong> prices hit new highs above $1,900, at <span><strong>$1943</strong></span>, reflecting investor concerns that the massive (and ongoing) stimulus measures around the world will lead to an inflation spike.</p>
<p><strong>Click </strong><a href="https://www.hotforex.com/en/trading-tools/economic-calendar.html"><strong>here</strong></a><strong> to access the HotForex Economic Calendar</strong></p>
<p><strong>Stuart Cowell</strong></p>
<p><strong>Head Market Analyst</strong></p>
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