It has been a complicated year for currencies globally, particularly for the dollar, because of the pandemic. However, the U.S. currency has managed to rise at every opportunity. As such, the USD is recovering after a minimum of two years of trading in the Forex market.
Analysts and investors have been watching the Dollar’s movements for some time now. Even though the currency has been on a difficult path, the feeling of relevance that the USD has always had in Forex trading cannot disappear overnight.
Therefore, thanks to this recovery, traders and investors are resuming their trading in the USD. However, there are still doubts and skepticism regarding the situation with the currency.
A Review of the Global and Currency Situation
Dollar Recovers after 2 Year Low
The U.S. currency solidified its gains Wednesday after the minutes of the U.S. Federal Reserve’s policy meeting were released, with better results than forecasted by economic analysts.
The recovery was also based on the Labor Department’s weekly report, which said the number of Americans who filed for new unemployment benefits suddenly rose to 1.106 million by the week ending Aug. 15. This is an exponential increase from 971,000 the previous week.
The previous week’s level of new claims was below 1 million, the first time since March that such low numbers have been reached.
However, the recovery in the update of these figures was clear, showing that the dollar is finally recovering in the forex market.
„The U.S. dollar largely resisted disappointing news in the labor market. That weighed on wider markets and offered a refuge,“ Joe Manimbo, senior market analyst at Western Union Business Solutions, told Reuters.
Why did the dollar collapse?
Dollar price to date
At the time of writing, the dollar index was trading at 92.80, with a slight drop in early performance. However, it remains at that 1% increase in its quotes.
The dollar index has risen by about 1% from a two-year low of 92.12 reached on Tuesday. As of mid-morning Thursday, the index remained virtually flat at around 92.95. And although it fell in afternoon hours, it has generally maintained the gains of the previous days.
Weak economic data has helped the dollar regain some of its safe-haven status. However, some analysts believe that this trend of the Dollar’s recovery will not be sustained because there are still many domestic and international tensions on the part of the United States.
Do you think that the Dollar could maintain this performance if the U.S. reduces political tensions with China?