Many European countries had to re-impose quarantine restrictions amid the rapid spread of the coronavirus. Small and medium-sized businesses may not be able to cope with another nationwide lockdown. So, investors are bracing for a new wave of bankruptcies and buying up safe-haven assets, including the US dollar. The ECB officials are also concerned about future prospects of the economy. After yesterday’s meeting, the regulator decided to “recalibrate” its monetary stimulus efforts in December.
The dovish rhetoric of the European central bank triggered a sell-off of the euro, which helped the US dollar gain ground. The US dollar index, which measures the strength of the greenback against a basket of six major currencies, is likely to close this week near its monthly high at 94.00. The presidential election is just around the corner. So, investors fear that the results of the election are likely to be disputed. Apart from risk aversion, the US currency is backed by strong macroeconomic statistics. Yesterday, the US GDP posted the fastest growth in history, soaring up by 33.1% for the quarter.
However, this upbeat data was unable to bring bulls back to the stock market. This is why the dollar/yen pair failed to develop an upward movement. It is stuck in the trading range between 104.20 and 104.70. If it consolidates below 104.20, the bears will take the upper hand. The pair may eventually decline to the level of 103.75. Yet, the upward trend is also possible if the pair fixes above the level of 104.83.
The AUD/USD pair is trading with a bearish bias amid risk-off sentiment. It is consolidating near the lower board of the wide trading range, falling below the key level of 0.7058. If it consolidates below this level, it may well drop to the levels of 0.6970 and 0.6938. Nevertheless, we see on the chart the hesitation of traders who are obviously waiting for additional bearish drivers to reopen short deals.
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