EUR / USD: Dollar is back in the game
August 10, 2020 1:21 pmVideo
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The greenback rose 0.7% against its main competitors on Friday after the better-than-expected US employment report for July boosted the yield on US government bonds.
According to the US Department of Labor, the country’s unemployment rate fell to 10.2% last month from 11.1% in June. At the same time, the number of jobs in the non-agricultural sector of the United States increased by 1.763 million against the preliminary estimate of 1.6 million. There was also a noticeable increase of 0.2% in the monthly wages against the 0.5% in the forecast.
US lawmakers also helped to strengthen the dollar, who have not yet managed to reach an agreement on new stimulus measures for the national economy. As a result, the growth of US stock indices stalled, and investors turned their attention to the USD again.
The greenback is also supported by increased tensions between the United States and China.
On August 7, the US Treasury imposed sanctions on 11 high-ranking officials in mainland China and Hong Kong, accusing them of undermining Hong Kong’s autonomy and restricting the freedoms of its citizens. In response, Beijing has decided to impose restrictions on 11 US officials.
On Monday, the USD index is trading near 93.6 points. The dollar is trying to build on the advantage gained amid the release of a strong report on the US labor market.
This week the focus of traders’ attention is the July report on consumer prices, retail sales, and industrial production in the US. Meanwhile, the EUR / USD rally stalled and the pair entered a correction phase.
One of the drivers of EUR / USD growth to two-year highs was Europe’s advantage over the United States in the fight against COVID-19. Although new outbreaks of the disease in some parts of Europe continue to remain insignificant, they are no longer localized.
The bulls’ attempts to break above 1.19 were unsuccessful, Danske Bank specialists see the likelihood of a more pronounced pause in the upward movement.
“Although the Fed’s policy remains negative for the dollar, the latest statistics on the United States have brought pleasant surprises. In general, the picture in the American economy does not look as dramatic as investors feared, who watched with concern the new wave of COVID-19 in the country. The latter, apparently, has reached its peak, while news from Europe signals the danger of repeating the American scenario. This can cool the ardor of the bulls on the euro, “they said.
The bank expects that the EUR / USD pair will trade at 1.16 over the next one to three months.
The material has been provided by InstaForex Company – www.instaforex.com
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