The US dollar index, measuring its strength against a basket of other major currencies, climbed to weekly peaks around 97.75 on Tuesday. If the upside pressure persists, the price could soon reach the 97.90 resistance that stands on the wat towards the 98.00 handle.
As dollar demand picked up, the EURUSD pair dipped back to the 1.12 level after yesterday’s short-lived rally to 1.1290. risk sentiment could deteriorate further later in the day amid the lingering coronavirus concerns as well as rising geopolitical tensions as China said it will take retaliatory measures on the US ending the special treatment of Hong Kong. In this scenario, the common currency could challenge 1.12 and extend losses to the 1.1170 region. On the data front, Eurozone preliminary CPI came in at+0.3% in June versus +0.2% y/y expected. Still, a better-than-expected report did little to ease the selling pressure surrounding the euro.
Meanwhile, GBPUSD continues to trade near monthly lows on Tuesday, suffering losses for the fifth day in a row already. Yesterday, the pair dipped to 1.2250 and remains below 1.23 now. One of the main drivers behind the current weakness in sterling is the fact that investors express doubts over the UK’s ability to pay for a massive boost to public spending. Now, the additional pressure comes from a stronger dollar coupled with the resurgent risk aversion. If the pair fails to make a decisive break above the 1.23 handle any time soon, fresh one-month lows could be ahead.
Elsewhere, gold prices remain flat since the start of the week, struggling to extend recent gains after a rejection from fresh multi-year highs around $1,780 last week. As the greenback stays elevated, the precious metal will hardly be able to climb significantly above $1,770 in the short term. On the downside, the immediate important support arrives at $1,755.