the US Dollar Index Gold hit a 2024 low last week after dovish comments from Federal Reserve Chairman Jerome Powell prompted global currency markets to expect a more dovish stance from the Fed than previously thought.
This has led to continued selling pressure, causing the US dollar to fall to new lows today!
As August comes to a close, the dollar index has fallen by 3.3% So far this month, marking its biggest monthly decline since November 2022.
Will the US dollar continue its recent decline, or will certain factors halt the decline and perhaps change things?
The short-term outlook for the US dollar depends on a number of key factors.
First, the decline in the Japanese yen carry trade could put some pressure on the dollar. Second, the strength of the US labor market is of great importance.
Strong employment figures will reduce the number of interest rate cuts expected by the Federal Reserve this year, further strengthening the dollar.
The value of the dollar is also often influenced by market participants’ perceptions of the Chinese economy. When market participants are pessimistic about China’s economic performance, the dollar tends to rise.
But if the Chinese economy shows signs of improvement, the dollar could weaken.
When the Chinese economy improves, global investors tend to become more optimistic about growth prospects. This increased risk appetite often leads to a shift away from safe assets such as the US dollar, weakening it.
This scenario is consistent with the dollar smile theory, where a rise in global economic optimism often coincides with the bottom of a “smile” – a period when the US dollar tends to weaken as investors look for opportunities in developing economies such as China.
Overall, the direction of the dollar in the coming months will depend on a combination of domestic jobs data and global views on the Chinese economy.
Forex Market Drivers
Let’s review the price action in Forex today.
Which currency pairs made the biggest gains today?
New Zealand Dollar/US Dollar He was the leader of the group, and got 0.77% or 41 points.
As explained by us Foreign exchange market drivers page, GBP/USD and New Zealand Dollar/Canadian Dollar He won silver and bronze today.
Looking at NZD/USD Trend Follow RatingIt shows rising classification.
The currency pair managed to climb back above all its major moving averages, which are now acting as dynamic support areas.
But NZD/USD Overbought/Oversold Rating He appears “Overpriced“
Which currency pairs lost the most today?
USD/CHF He was the biggest loser, as he fell. 0.67% or 56 points.
Looking at USD/CHF Pivot Pointsprice is below all pivot point support levels!
currency strength
What is the overall strength or weakness of the individual major currencies today?
Based on currency strength meter On MarketMilk™, New Zealand Dollar It was, without a doubt, the strongest currency, while US Dollar It was the weakest currency.
If we dig a little deeper and look at how the major currency pairs work Moved in the last 24 hoursWe can see how the USD/CHF pair started to decline during the European session.
Short term currency trends
When it comes to Short term trend strength, New Zealand Dollar Shows the greatest upward force.
the US Dollar Shows the most downward force.
currency trend momentum
Trend momentum indicates the likelihood that the price will continue moving in its current direction. US Dollar It is currently showing very bearish momentum.
Heat map of currencies
If we take a look In our country Heat map of the currencyWe can see the weakness US Dollar Across time frames.
currency fluctuations
What is the most volatile currency today?
Based on our website Currency Volatility Meterthat it JPY.
Check the increase in Today’s volatility for major currenciesJust notice how. volatile JPY It has been within the last 24 hours.
What is the most volatile currency pair today?
On condition JPY Which currency pair was the most volatile?
New Zealand Dollar/US Dollar was the most volatilemoves by 0.99% or 60 pips.