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USD Shrugs Off Trump's Troubles, But For How Long?

USD Shrugs Off Trump's Troubles, But For How Long?

2018-08-22 10:00:00
Martin Essex, MSTA, Analyst and Editor
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USD price, news and analysis:

  • The US Dollar has so far failed to react much to news that two of Donald Trump’s advisers face jail.
  • Although USD is supported by its safe-haven status, the President’s problems could yet send it lower.

Our trading forecasts for Q3 have been published; you can find the USD guide here.

And check out the IG Client Sentiment data to help you trade profitably.

USD in focus as Trump advisers face prison terms

The US Dollar has weakened only modestly Wednesday despite news that two of US President Donald Trump’s former advisers are facing lengthy prison sentences but its losses could well accelerate despite the currency’s status as a safe haven at times of risk aversion.

Moreover, expectations are not high for the US-China trade talks that resume at a low level in Washington Wednesday even though Tuesday’s record high for the S&P 500 US stock market index suggests that trader sentiment towards US assets remains positive.

Moreover, a breakthrough in the talks between the US and Mexico on the North American Free Trade Agreement (NAFTA) has not yet been reached even though Mexico has said they are making “good progress".

Against this background, the US Dollar Basket is falling and even though the decline Wednesday has far been modest there is scope for its losses to accelerate.

US Dollar Basket Price Chart, Daily Timeframe (May 15 – August 22, 2018)

Latest USD price chart.

Chart by IG

In the next few days, USD is likely to be influenced by both the minutes of the latest meeting of the US policy-setting Federal Open Market Committee, due later Wednesday, and by comments by Federal Reserve Chair Jerome Powell at the Jackson Hole central banking symposium Friday.

With analysts expecting another US interest rate increase in September, there is a possibility of disappointment.

US Dollar chart analysis

Meanwhile, the chart above suggests that USD is now trending lower, having fallen from a high of 96.60 on August 15 to its current level close to 94.72 against a basket of other major currencies. For now, the 50-day moving average at 94.64 is providing support but any break through it could lead to further losses to the psychologically important 94 level, where the 100-day moving average also sits.

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--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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