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Dollar Set to Snap Two-Week Win Streak Amid Expectations Low Rates to Persist

ForexSep 18, 2020 04:03PM ET
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By Yasin Ebrahim

Investing.com - The dollar is set to snap a two-week losing streak, raising concerns about whether the greenback has really found its footing after five-straight months of declines, with lower for longer interest rates expected to persist.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was flat at 92.97.

The dollar's sluggish end to the week comes just days after the Federal Reserve left rates unchanged and tied monetary policy guidance to inflation rising above 2% for some time. But the decision was accompanied by projections that suggest rates hikes would remain on hold at least through 2023, and inflation unlikely to get above the 2% level by then.

"As long as market expectations of an economic rebound hold, we’d say negative real yields will keep the dollar bear trend intact and investors will use position adjustments (like today) to reset dollar short positions" ING said in a note.

Adding to the dollar woes, the prospect of the economy receiving another shot of stimulus from congress appears murky, at best, even as economists warn that a lack of fiscal support could halt the current economic rebound.

EUR/USD traded flat $1.1850, while GBP/USD fell 0.37% to $1.2924, with the latter shrugging off better-than-expected retail sales data amid ongoing fears that the odds of a no-deal Brexit are rising.

USD/JPY traded fell 0.13% to 104.59 while USD/CAD added 0.27% to $1.3199.

Dollar Set to Snap Two-Week Win Streak Amid Expectations Low Rates to Persist
 

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