Naked Markets

The exchange rate of the euro against the dollar is around USD 1.05090Will the US currency benefit from concerns about the global slowdown? This is what the market seems to assume – the dollar is gaining even though the yields on US bonds are going down. But not only those, it is so widely in the market. Debt begins to price in central banks not being that aggressive (or not so necessary) as the recession will help deal with excessively high inflation.

The dollar basket on a weekly basis tries to reverse the uptrend

Theoretically, this does not have to be bad news for the stock markets (they already priced in the deterioration of the economic situation resulting from the actions of central banks), as a result of which Wall Street recorded a slight increase today. The question is how much this will translate into an improvement in moods in other markets and over time it will also … weaken the dollar.

FUSD weekly chart

The dollar basket on a weekly basis tries to reverse the uptrend. As long as it does not come back above the peak from early May at 105.05, such a scenario of decline will be possible.

EURUSD daily chart

The lack of decision as to the direction of quotations can be seen in the case of EURUSD. The decline resulting from disappointing PMI data from the euro zone (they may limit hawkish expectations in the ECB) was erased in the following hours.

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