The expectations of the future performance of the dollar were met. Since forex market analysts and traders expected the dollar to remain in a negative trend. In this way, although it had moments of rise, the greenback ended the month of August with a minimum of 2 years.
At the beginning of the pandemic, the dollar was the dominant currency in the Forex market, then it faded over the weeks. Well, investors and traders sheltered themselves in the American currency, taking it as a value reserve asset in the face of the crisis.
And against all odds, at the end of the first quarter of the pandemic, the dollar began a free fall towards a negative performance. This because of the constant inflections and internal problems that the government of the American country was having.
The dollar closes another month with a negative trend
The greenback hit a more than two-year low against the euro on Monday, posting losses for the fourth consecutive month. This is due to the change in policy of the United States Federal Reserve on inflation.
On Thursday, August 27, the president of the United States Federal Reserve made statements that definitively changed the course of the dollar and its operations in the Forex market.
Weeks before Powell explained which way to go by the FED, the dollar had begun a slow recovery, which with the passing of days disappeared.
The bad streak seems to continue, because of the Fed’s plan that will focus on keeping inflation at 2% on average.
“The dollar bears have been the winners lately. Following the change in inflationary policy by the Fed, which should keep US rates close to zero for the foreseeable future, “Action Economics analysts wrote for Reuters.
Dollar price to date
At the time of writing the dollar index (DXY) was trading at $ 92.01, against a basket of currencies. Undoubtedly, the greenback is under strong pressure.
The DXY is down about 1.5% on the month, marking its worst August in five years.
Powell’s remarks last week reinforced a downtrend in the dollar.. The stimulus from the FED to counteract the economic effects of the coronavirus pandemic, has raised investors’ appetite for safer assets with Gold and Bitcoin, clearly hurting the US currency.
Do you think the dollar can regain its strength if the United States changes its course in economic decisions?