- US Dollar drops sharply on Trump’s tweets, bonds rally and Wall Street extends losses.
- EUR/USD erases weekly losses, back above the 20-day moving average.
The EUR/USD pair has risen now almost a hundred pips from the weekly low it reached earlier at 1.1050. As of writing trades at 1.1145, the highest level in a week, as Wall Street drops sharply and the DXY tumbles.
Powell offset by trade war escalation
The greenback fell dramatically across the board on the back of a new escalation in the trade war between the US and China. Earlier today China announced retaliatory measures, including higher tariffs for $75B US goods. Recently, US President Trump mentioned in a tweet that later today, he will announce his response to the new Chinese tariffs.
After trading in positive ground, equity prices in Wall Street are sharply lower now. The DOW JONES falls 1.35% and the NASDAQ 1.63% in response to recent comments from Trump. He also criticized Fed’s Chair Powell again.
Expectations about what the White House will mention increased even more concerns about the impact on the economy from the escalation in the trade war. Recent events overshadowed Powell’s speech in Jackson Hole. He said the central bank is ready and prepared to provide more stimulus if the current global environment hits the US economy.
The decline of the US Dollar is taking place even against currencies like the Aussie, usually more affected negatively from the US-China trade conflict. Some emerging market currencies have trimmed losses versus the greenback.
Meanwhile, EUR/USD holds at the top, after rising from three-week lows to one-week highs in a few minutes. The bearish pressure on the greenback appears to be intensifying. The Euro is among the top performers after the Yen and the Swiss franc.