- US Dollar to find support from the delay in Coronavirus relief bill talks
- Senate breaks for summer recess on August 7
- US Dollar had earlier fell below the 9-year support level, indicating continued weakness
- Short-term bounce in the Dollar Index could happen because of the oversold condition
Asia-Pacific Market Action
Victoria, Australia’s second-most populous state, declared a state of emergency to battle a surge in Covid-19 infections, but the ASX 200 ignored the development and traded higher in the day.
As tensions between the US and China rose, the safe-haven buying of USD and Japanese Yen pushed the currencies higher. The Trump administration is widely expected to increase its measures against Chinese-controlled software firms.
Gold traded below $1,975/oz after recorded fresh highs earlier trading.
USD to Find Support as Virus Relief talks Stagnate
Coronavirus relief package negotiations aren’t making much headway as ideological differences stop the policymakers from reaching a consensus. A $400 reduction to current weekly unemployment benefits is the main talking point in these discussions.
Many policymakers worry that enhanced payments will encourage people to stay at home rather than to work. The stand-off is amidst the surge in Covid-19 patients to 5 million and the Capitol Hill is under pressure to ratify the proposed $1 trillion HEALS Act; the Senate summer recess starts on August 7.
If the talks show a lack of progress before the recess, the Greenback will be back in play, especially if primary economic data disappoints.
The US dollar had recently suffered severe sell-off, 14 Percent against its major counterparts, and even went below its 2011 uptrend support. Immediately before this, it had touched 19-year highs, 102.99, in March.
More weakness is expected in the currency as its RSI has dipped below the neutral midpoint for the first time in two years. Also, it is essential to note that the Greenback seems to follow an 8-year rotation, suggesting that it is entering a cyclical downturn.
Such a decline earlier was seen in 2002, when the US dollar broke the uptrend from starting from 1996 low, selling off 40 Percent and finally bottoming in mid-2008.
