The greenback managed to recшуму a boost from a gloomy outlook from Powell. The Federal Reserve Governorhighlighted that the US economy will face a prolonged period of weak growth and hinted at recession risks. As a result, risk sentiment deteriorated dramatically, as the downbeat tone from Powell added to concerns over the state and the outlook for the world’s largest economy. This, in turn, fueled demand for the safe-haven dollar against high-yielding currencies like the euro and sterling.
EURUSD failed to challenge the 1.09 handle once again and had to retreat towards 1.08. Now, the euro needs to hold above this level in order to avoid deeper losses. Today, the ECB released its latest economic bulletin, according to which, survey indicators suggest a sharp contraction in economic growth. However, traders were not surprised by the statement as the latest data keep pointing to slowing economic growth in the region due to the coronavirus crisis.
Meanwhile, the safe-haven yen keeps rising, sending the dollar back below 107.00. the pair still struggles to get back above the 20-DMA after an aggressive rejection from local highs around 107.80 at the start of the week. On the other hand, it looks like the downside potential in the pair is limited at this stage, and the prices will likely continue to cling to the 107.00 handle in the near term.
Despite the prevailing risk-off sentiment in the global financial markets, gold prices struggle to show a more robust ascent as dollar demand caps the upside impetus in the bullion. The precious metal faces the immediate resistance around $1,720 that will likely limit the upside potential during today’s trading. In a wider picture, the prices need to overcome the $1,730 region in order to retarget highs marginally below $1,750 registered one month ago.
Later today, fresh weekly jobless claims data may affect dollar pairs in the short term. However, market reaction to this report has got more muted recently as it looks like traders take extremely weak numbers for granted already.