Trading | 2 months ago
This week U.S. dollar strengthened against all of the top traded major currencies including Euro and Japanese yen. The uncertainty due to the global pandemic and the safe haven status has supported the U.S. dollar to hold the top position.
The U.S. Dollar Index which is the leading benchmark for the international value of the US dollar against Euro (EUR), Japanese yen (JPY), Canadian dollar (CAD), British pound (GBP), Swedish krona (SEK), and Swiss franc (CHF), is trading above the 93 level. The slowing Chinese economy and the political instability in Afghanistan has also contributed to the surge in the demand of U.S. dollar.
As a result, the U.S. Dollar Index jumped to 0.54% to 93.05 in this week. The USD/CNY pair is also up by 0.05% to 6.4800 as the business activities in China continues to get affected from the imposed restrictions. Foreign institutional investors, high net worth individuals as well as domestic investors are buying U.S. dollar in order to mitigate the risk associated with any other currencies or as a hedge against the uncertainty in the economy.
The commodity currencies like Australian dollar and New Zealand dollar registered a sharp selling after the lockdown announcement due to the increase in the coronavirus cases. The Australian dollar fell to a nine-month low while the New Zealand dollar slumped to three weeks’ low.
The long-term technical outlook for dollar index is bullish as it is trading above the 200 simple moving average. Therefore, one must look for buying opportunities in US dollar against other currencies.
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