The US dollar has risen sharply over the past month, mainly thanks to increased trade tensions and fears of a global trade war between the United States and China. The greenback rose amid fears of a decline in light of the negative consequences that may be caused by the trade dispute between the two largest economies in the world.<\/p>\n
The dollar benefited from investors’ reluctance to invest, and investors were encouraged to sell out of riskier currencies.<\/p>\n
Confidence in the US economy has also been boosted, with unemployment falling from 4.0% to 3.9% in July. In addition, while the US Federal Reserve kept interest rates unchanged at the August meeting, US policy makers kept the door open for an increase in interest rates at the September meeting.<\/p>\n
This helped bolster the US dollar and its appeal to investors, together with positive economic data for US jobs and inflation.<\/p>\n
Federal Reserve Chairman Jerome Powell has also contributed to reducing market concerns by suggesting that the political pressure coming from the White House may prevent the Federal Reserve from moving to further rate hikes.<\/p>\n
Expectations of higher price pressures following the release of consumer price index data for July may also lead to increased demand for the US dollar. The US dollar may also benefit from domestic price hikes, which could lead to the Federal Reserve’s tendency to raise US interest rates. The release of the FOMC meeting minutes may also help extend the bullish run of the USD.<\/p>\n
The second quarter US GDP data, which is expected to confirm another strong acceleration in US economic growth, will also be highlighted. As long as the US economy continues to show strength and growth, the situation against the greenback is likely to remain broadly positive.<\/p>\n
In terms of the Euro, the currency in the euro zone, the data were largely stable following the slowdown in the economy in the second quarter. The ECB has maintained an optimistic outlook, but remains somewhat cautious.<\/p>\n
The ECB is still predicting that the euro zone economy will recover and be steadily strengthened. The bank asserts that interest rates in the eurozone will rise only after the first half of 2019, while markets expect the bank to raise interest rates by the end of next year.<\/p>\n
In late July, US President Donald Trump and European Commission President Jean-Claude Juncker met, and both sides appeared optimistic about the future of US-EU trade relations. As US-China trade tensions have not had a noticeable impact on euro area data, investors have become more optimistic that the euro area economy will overcome trade concerns.<\/p>\n
Next week the euro zone’s second-quarter growth forecast and final inflation results for July will be released. If the data will be better than expected, interest rate hike bets from the European Central Bank may rise, and so might the Euro.<\/p>\n
But of course, any concerning trade developments related to the United States and the euro zone could limit the euro zone\u2019s currency potential in the coming weeks.<\/p>\n","protected":false},"excerpt":{"rendered":"
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