The Dollar Tumbles From Weak US Economic Indicators

The dollar is not having a good time so far. Since the start of the week, all events that transpired all played against its advantage.

Today, the greenback faces another setback as the government reported higher-than-expected new jobless benefit claimants.

For the week ended, 778,000 joined the unemployed data from an initial forecast of 730,000. 

Experts warned that this could balloon soon now that more states are resorting to stricter mobility restrictions with a growing number of infections.

On top of this, the country failed to live up to analysts’ expectations on quarter-on-quarter GDP growth after notching a 33.1% increase.

The USD index, which trails the performance of the world’s reserve currency against other entities in the basket, fell by 0.31%.

It settled only a little above the 91-point threshold after starting at the 93-point level on Monday, which is its lowest in nearly three months.

Investors are again placing their bets away from safe-haven assets now that risk sentiment is on.

Stocks are benefiting from the risk appetite. All three major Wall Street indices capped yesterday’s session on a record high. 

The Dow Jones Industrial Average hit 30,000 for the first time in the previous trading day.

According to experts in the field, the dollar has much room for a rebound as the fall came too rapid. 

On the other hand, the long-term outlook is bearish according to foreign exchange experts. 

The US currency may likely face downward pressure brought by the Covid-19, which is expected to last until next year, with or without a vaccine.

Euros Rise to Multi-month High

With the recent setback, euros firmed against their counterpart, rising to a two-month high after recording a 0.3% increase.

It currently trades at $1.1930 against the USD and investors are expecting that the pair would reach the $1.20 level.

The threshold has been breached in early September for the first time since 2018.

According to strategists, the forecast for the duo remains on the bullish side as it now trades around the $1.19 resistance level.

The vaccine optimism combined with the prospects for a swifter transition to Biden administration provided support.

Similarly, the developments on the Brexit deal also adds cushion aside from the successive good news.

Consequently, the sterling is also recording impressive performance since the previous week.

In the latest forex charts, the pound trades at its strongest since early September at $1.1926 while it holds steady at 89.02 pence against the euro.