The fall of the dollar in the Forex market was an unexpected event at the beginning of July. Even analysts began to consider that there was no turning back for the dollar. However, expectations grow with this new possibility of resurgence.
Despite the good performance of the currency at the beginning of the pandemic, the effects of the dollar showed that the political and social situation of a country can directly affect the behavior of a currency in Forex.
Well, as the tensions between China and the United States increased, and the Coronavirus continued without any control, spreading throughout the North American territory, the operations in the dollar were diminishing.
The free fall of the dollar
The leading currency of choice for investors and traders has fallen out of favor lately. This is due to a combination of concerns around the United States.
Expectations of further action by the Federal Reserve, the evaporation of refuge demand amid calmer markets and a resurgence of the euro came together to sink the reserve currency.
These factors have caused the dollar to remain in a free fall. So much so, that the currency has kept on the road to its biggest monthly drop in a decade.
However, some expert traders and analysts are watching for the future release of unemployment figures in the United States. They consider this indicator as a possible upside promise for the dollar trend.
At press time, the dollar is trading at 1.1785, after hitting its annual low of 1.19 against the euro last Friday.
The Forecast for Unemployment Figures and US Farm Payrolls
For traders and analysts, a great week is ahead in the Forex market, and even more so for the dollar. Since, this publication of figures on Friday, can mean fuel for the rise of the dollar.
Analysts wonder if a positive payroll report will be enough to stop the relentless fall of the dollar.
This after the Reserve Bank of Australia and the Bank of England announced their decisions on employment rates. Noting that they make their predictions before the most important employment data in the United States is released.
The other variable that will affect most Forex trading is whether the US Congress will reach a consensus on the new rescue package.
Last month the US unemployment rate fell sharply to 11.1%, now it is expected to continue to decrease to 10.5%. In any case, we must wait until the official figure on Friday, as there are reports that the layoffs continue.
However, it is too early for US payrolls to reflect the slow recovery from these numbers. This is all the more so when the late effects of the virus are hardly being observed in world economic figures.
The Golden Question: Can the Dollar Recover?
Although expectations are set by these figures to be published. There really is still uncertainty among traders and analysts about the currency in the Forex market.
The decisive benefits, such as the additional $ 600 per week in unemployment aid, expire on July 31. And congressmen have made little progress on a new aid package.
This creates a risk of a major negative income hit for millions of Americans. Possibly affecting individual consumption, and even more so the figures of the American economy.
And while it’s true that some deal is likely to be closed before Congress goes into recess at the end of the week, the stakes are high.
Since politicians do not want to be blamed for destroying the recovery, especially before the elections.
In this way, the more time that passes without clear signs that an agreement is within reach, the more nervous the markets will be, not fully allowing the dollar to rise.