[ad_1]
The US dollar index (DXY) is falling today as forex investors continue worrying about the rising US public debt and a recent call by Goldman Sachs analysts. It is trading at $90.35 that is 1.35% below the February high of $91.53.
US debt worries
The US dollar has been under pressure in the past few months mostly because of the policies by the Federal Reserve. The bank has slashed interest rates to zero and launched its biggest quantitative easing program in the world. Precisely, the bank is buying government bonds worth about $120 billion every month.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
The dollar index has also tumbled because of the rising public debt. Since the pandemic began, the US has borrowed more than $4 trillion to support the economy. Congress is currently deliberating another $1.9 trillion package on top of the $900 billion it passed early this year.
As a result, the Congressional Budget Office (CBO) said that the federal deficit will soar to $2.3 trillion this year. The deficit will decline to about $1 trillion in 2023 and 2024 and continue rising by more than $1 trillion in each year going forward.
Meanwhile, the dollar index is falling after analysts at Goldman Sachs turned bearish on the currency. In a note to investors, the bank wrote that:
“Global growth should be very strong over the next six months as the vaccination campaigns play out. We expect global cyclical forces to dominate some degree of ‘U.S. outperformance’, resulting in dollar downside for most crosses.”
Later this week, the greenback will react to important economic numbers from the US like retail sales, producer price index (PPI), manufacturing and industrial production, and housing starts.
The greenback fell by 0.30% against the Swedish krona and by 0.50% against the British pound. It also fell by 0.30% and 0.10% against the Canadian dollar and Swiss franc, respectively.
eToro:
visit & create account
US dollar index technical outlook
The four-hour chart shows that the US dollar index formed an ascending channel between January and early February. It then experienced a bearish breakout on February 9 and dropped to $90.23. The price then bounced back but found a strong resistance at $90.73 and then started moving lower.
Therefore, in the near term, the index will continue falling as bears attempt to move below the next psychological level at $90.00.
[ad_2]
Source link