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MTrading Team • 2022-07-26

US dollar stays pressured amid pre-Fed sluggish markets, oil ignores recession fears

US dollar stays pressured amid pre-Fed sluggish markets, oil ignores recession fears

Markets remain directionless as softer yields drown the US dollar ahead of the Fed’s monetary policy meeting, up for Wednesday. The recession fears, however, restrict the greenback’s downside while also capping the riskier assets’ gains.

Wall Street closed mixed and the Asia-Pacific traders also sought fresh clues but ended up marking indecision. USD Index prints a four-day downtrend, which in turn helps gold and oil prices. On top of it were chatters over Russia’s halt of gas supplies to the Eurozone that provided the boost to the black gold that’s rising for the second consecutive day.

EURUSD fails to cheer the softer greenback amid fears of economic recession but AUDUSD and USDCAD mark notable moves on that basis.

Further, BTCUSD and ETHUSD extend the week-start losses towards refreshing a one-week low.

Following are the latest moves of the key assets:

  • Brent oil rises for the second consecutive day, up 2.0% around $107.00 at the latest.
  • Gold reverses the week-start losses as buyers approach $1,725.
  • USD Index remains pressured around 106.50, mildly offered by the press time.
  • FTSE 100 prints mild gains but Eurostoxx and DAX both stay on the bear’s radar.
  • Wall Street closed mixed as Nasdaq dropped but S&P 500 and DJI both printed mild gains.
  • BTCUSD declines 1.0% intraday around $21,000 while ETHUSD drops nearly 2.20% to $1,410 at the latest.

Pre-Fed anxiety weighs on the US dollar

Global traders brace for the Fed’s 0.75% rate hike amid economic slowdown fears. However, the US dollar fails to benefit from the risk-off mood as the Treasury yields remain pressured. Also weighing on the greenback could be the recently downside US data, as well as Moody’s downbeat economic forecasts for the world’s largest economy.

Gold prices extend recovery from the yearly low while Brent oil rallies amid calls for a supply crunch and more stimulus from China.

It should be noted that AUDUSD rises the most among the G10 currency pairs while EURUSD remains pressured as Russia teases a halt to gas supplies. Further, the GBPUSD eyes further gains amid political optimism and recently firmer odds of the Bank of England’s (BOE) aggression in the next meeting.

Cryptocurrencies continue to portray risk-aversion as the benchmarks BTCUSD and ETHUSD drop for the second consecutive day. In addition to the broad risk-aversion, the SEC probe over the key crypto exchange player, Coinbase, also weighs on these currencies.

⏫ 🟢 Strong buy: USDCAD

⏬ 🔴 Strong sell: Nasdaq, silver, ETHUSD

⬆️ 🟢 Buy: USD Index, USDJPY

⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD

US CB Consumer Confidence can entertain traders

While recession fears and downbeat equities may offer intermediate moves ahead of Wednesday’s FOMC, today’s US CB Consumer Confidence for July can also be important as traders brace for a more dismal consumer mood after Walmart’s downbeat forecasts of profit. Also important may be the second-tier activity and housing data from the US, which in turn may exert more downside pressure on the US dollar should the scheduled figures print softer numbers.

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