The US dollar (USD) has extended its short -term bassist momentum, falling dramatically and prolonging a four -day drop while investors settle in a risk posture, leaving the dollar shelter and entering more risky assets as they bet on a continuous cooling of recent tensions in the Middle East.
This is what you have to observe on Wednesday, June 25:
Despite a rocky start of the high fire agreement mediated by Trump that is currently on the table, investors are betting on the gradual reduction of tensions due to missile launch between Israel and Iran. The American dollar index (DXY) is already playing minimums of several years and is prepared to close about 97.70 for the first time in almost 40 months. The second day of the testimony of the president of the Federal Reserve (FED), Jerome Powell, before the Financial Committees of the Congress and the Senate will begin on Wednesday, and the markets can expect President Powell to address a wide range of questions that are barely related to monetary policy.
The EUR/USD reached a 44 -month peak on Tuesday, rising above 1,1600 for the first time since October 2021. promoted by a general weakening of the dollar, the euro is capturing a wide market offer, despite a new reminder that tariff tensions between the EU and the US Tuesday that they are preparing a response package of retaliation measures if the reciprocal tariffs of US President Donald Trump, who were announced and then immediately suspended in April, allowed them to re -enter into force in July.
The GBP/USD is also enjoying a bullish support thanks to the weakness of the dollar, playing several years about 1,3650. A handful of low impact appearances of the monetary policy responsible for the Bank of England (BOE) will be filtered through the news feed on Wednesday, but nothing shocking or material is expected.
The USD/CAD is prepared to rotate outside a short -term recovery of the CAD in the technical graphics. The fall in crude oil prices is weakening CAD buyers, pushing the USD/CAD graph based on the dollar back to the level of 1,3700 after having touched the upper end of a descending technical channel.
The Aud/USD has resulted in its medium -term consolidation channel, oscillating around the 0.6500 region as a prisoner who walks along the coast of Santa Helena. The inflation figures of the Australian consumer price index (ICC) for May will be published early Wednesday, but great surprises are not expected in the prices or significant changes in inflation levels according to market forecasts.
The Xau/USD has backed away from recent maximums, lowering below 3,350.00 as market concerns about conflicts in the Middle East continue to decrease. The demand for an active refuge to get rid of cash has evaporated, and gold buyers can expect the short -term price action in the yellow metal to continue falling into the graphics.
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
