The United States Dollar is Facing Several Risks Currently

The United States Dollar is Facing Several Risks Currently

Let us check the market. The dollar faces several risks. That is what a certain investment bank has said. The United States Federal Reserve may shift toward an ‘inflationary bias’. A rise in political uncertainty and debt buildup as a result of the pandemic can lead to fears around debasement.

In a research note published earlier this week, a Goldman strategist said that real concerns around the longevity of the United States dollar as a reserve currency have started to emerge.

Analysts at ING, in a research note, said that it remains unclear as to in what form and when the stimulus will pass. The possible delay underscores the downside risks of the United States’ economic recovery (rising coronavirus cases already hit it). Thus, the prospects for a more pronounced and longer-lasting U.S. dollar rebound appear to be limited. The U.S. dollar remained in a structural bear trend, in their view, added the analysts.

The situation in the United States

There are thus doubts about the United States’ economic recovery. The Federal Reserve will conclude its last meeting. So, on Wednesday, the U.S. dollar traded lower in early European trade.

The dollar index tracks the greenback against a basket of six other major currencies. So, at 3 AM ET (0700GMT), the index decreased by 0.2% to 93.507. Thus, it is not far removed from the 93.448 low last seen in May 2018. The United States dollar continued to lose ground against both risk and haven currencies. Thus, it seems the U.S. dollar will continue to lose ground for the time being. The USD/JPY pair decreased by 0.1% to 104.97, the GBP/USD pair gained 0.1% at 1.2946, and EUR/USD pair was up by 0.3% to 1.1753.

The Federal Reserve of the United States concludes its latest two-day meeting on Wednesday. Most probably, it will stick to a dovish stance at its policy review later in the day.

This is the leading news of the market.

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