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Aug 17 - 04:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Highs Come Into View As Dollar Doldrums Wear On

By Paul Spirgel  —  Aug 17 - 03:45 PM

The dollar fell against other major currencies as the delay in the review of the U.S.-China trade deal boosted risk appetite while unexpectedly weak Empire State manufacturing data highlighted concerns about the ability of the U.S. economy to sustain a robust recovery.

The ongoing congressional impasse over further COVID-19 recovery aid provided the backdrop for dollar weakness, with speculators content to load up on euros in recent weeks nL1N2FG1WC.

The dollar index nursed losses of about 0.18%, with EUR/USD up by a similar percentage at 1.1867 as bulls eyed a return to the 2020 high by 1.1916.

For now, EUR/USD remains on course for a potential test of 1.2085-1.2105 resistance, though the signals of a possible correction are growing [nL1N2FJ0QJ].

Enhanced Chinese liquidity nL1N2FJ01M added to the risk-on dollar selling as global recovery hopes were boosted, no matter the U.S. concerns.

Asian currencies such as the yen and aussie led the rally against the dollar, as PBOC moves were interpreted as specifically Asia-friendly, with INR, CNY and KRW also doing well.

USD/JPY tested support by 105.96 -- the 38.2% of the 104.2-107.05 rise -- with eyes on the 50% Fib at 105.62 [nL1N2FJ169].

Commodities -- notably oil and copper -- rallied on the risk-positive tone for global recovery.

Sterling took another shot at trading above 1.31, shrugging off Brexit woes in favor of dollar weakness due to coronavirus outbreaks and the partisan impasse over further U.S. economic recovery aid. Still, the pound's lack of success in holding ground above that level showed bulls were not yet confident in pressing the case just yet nL1N2FJ18N.

Global equities pushed higher and Bitcoin also rallied to 13-month high.

Gold was up 2% and silver gained 3.8% as U.S. Treasury yields reversed some of last week’s quarterly-refunding rise.
Silver, having a dual role as a industrial metal, rallied on upbeat economic tones.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary

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