The US currency during the trading session on Wednesday shows mixed dynamics. The US Dollar Index (DXY) is consolidating near 97.30 by 10:00 Moscow time.
Coronavirus again became the main topic of discussion, which was once again emphasized during yesterday's joint speech by US Treasury Secretary Stephen Mnuchin and US Federal Reserve Jerome Powell. The chairman of the regulator tried to mitigate the overall negative picture, noting that the US economy was able to recover to current levels faster than predicted. However, he also clarified that its future prospects will depend on how quickly the US economy can defeat the pandemic. Since Powell never announced a new package of financial assistance, buyers of the dollar had another chance to resist sellers, who expected that new portions of liquidity in the national financial system would inevitably lead to higher inflation and a subsequent devaluation of the currency.
Powell's comments that the US economy remains on the growth path are also confirmed by statistics. Conference Board Consumer Confidence in the United States rose to 98.1 in June from 85.9 in May. Today, investors are focused on the June US labor market report from ADP, ISM index for the manufacturing sector and inflation acceleration, as well as the minutes of the last meeting of the US Federal Reserve.
Further support to the dollar will continue to be provided by the deterioration of the epidemiological situation in the world. The rise in coronavirus infections in Florida, Texas, California, and Arizona has led some analysts to fear re-enforcing quarantine restrictions that could slow down US economic recovery. The number of cases of COVID-19 in the United States daily exceeds 40 thousand. Experts fear that this figure may reach 100 thousand people.
A separate topic for market concerns that support the demand for defensive assets remains the tension in US-Chinese relations ahead of the U.S. elections, as well as the likelihood of worsening trade relations between the US and the EU, which could create another threat to the prospects for global economic recovery. With that said, we recommend holding DXY purchases in order to consolidate the index above 98.00.
DXY BuyLimit 97.20 TP 98.50 SL 96.80
Analytical reviews and comments on them reflect the subjective opinion of the authors and are not a recommendation for trading. Posted by Artem Deev Trader Analyst at AMarkets . The social network of traders is not responsible for possible losses in case of using review materials
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