EUR / USD edged down as the pair retreated from the mid-1.1800 to Tuesday to trade around 1.1820, down 0.1% on the day. Speculation over Powell’s speech is the main driver, with several side protests having their say as well, such as developments in Covid-19 and US-China relations, says FXStreet analyst Yohay Elam.
AIT – the new three-letter acronym that promises to lower the dollar is not here yet, and the greenback is cutting its losses. AIT stands for Average Inflation Targeting – a new policy framework that will allow the Federal Reserve to exceed 2% for a year in order to compensate for low inflation in advance. The new framework means keeping interest rates lower for longer – thus weakening the dollar. Speculation about this long-term change weighed on the greenback but may have reached its limit.
“The ‘fiscal cliff’ America experienced at the end of July – when federal unemployment benefits and other programs expired – could take a toll on sentiment.
The curve of COVID-19 cases in the United States continues to decline encouragingly as deaths remain high, still around 1,000 per day. President Trump will meet with medical professionals later Wednesday. He is eager to see a vaccine before the election. Infections are on the rise in Europe, led by Spain. Governments are reluctant to impose broad lockdowns and have so far opted for localized measures. Things can change when temperatures drop and hospitals see patients with both the flu and COVID-19. ”
“Sino-US relations remain calm as China is reportedly buying a record amount of soybeans in 2020. As the world’s largest economies clash on many fronts, they are aligned with trade relations – at least for now. . “