The dollar is showing weakness again which is of course, due to the coronavirus. New anti-records that were set in the United States and the world over the weekend, increased pressure on the dollar. So far, traders have ignored the fact that the spread of COVID-19 has increased worldwide - for example, the number of cases has increased by 230,370 people over the past 24 hours: this is also a new anti-record (the previous one was established recently, July 10). Despite such an alarming trend, demand for the dollar remains low. The US currency is not used as a defensive asset, although the level of anti-risk sentiment remains high.
However, apparently, traders are primarily concerned about the situation in the United States. The incidence rate here is growing almost exponentially. If the daily increase was at the level of 17-25 thousand at the beginning of June, then at the end of last month, this figure exceeded the 30 thousandth mark. At the beginning of July, the indicator steadily increased, first having crossed the 4500th, and then the 50th thousandth level. And in recent days, the States report almost every day about anti-records: for example, more than 66 thousand people have been infected there over the past day. The indicator does not fall below 60 thousandth. The epicenter of the spread of the epidemic has shifted to the Western and Southern states of the country. In general, 33 states of the country reported an increase in infection rates (compared with last week). 14 states have stable performance, and only three states reported a reduction in infection. The most sad situation is in Texas, Arizona and Florida (for example, in the last state, more than 40 hospitals do not have enough beds in intensive care units). And the forecasts are quite pessimistic: according to the country's chief epidemiologist, if such a dynamic continues, the daily increase in infected people may reach one hundred thousandth mark. With an increase in the number of new cases of the disease and an increase in the rate of hospitalization, the number of deaths will also increase - according to the US Department of Health, the number of deaths will steadily increase for another two to three weeks, after which there may be a decline. But at the same time, officials acknowledge that the likelihood of another wave of the disease in the fall is very real, since "90% of the country's population has not yet been affected." Furthermore,
There is no consensus among experts on why the United States suffered the second wave of the pandemic. According to some experts, this is due to an increase in the number of tests carried out (Trump adheres to the same position), according to others, the mass protests and the weakening of quarantine were the starting point. But most American epidemiologists agree that the United States has not developed a single mechanism to contain the epidemic. Moreover, State authorities are making efforts at the local level, but there is still no single, centralized strategy to counter COVID-19. According to experts, the country needs a federal strategy, while the White House prefers to shift political responsibility to governors. It is noteworthy that the day before yesterday, Donald Trump appeared in public in a medical mask for the first time since the outbreak of the pandemic.
It is worth noting that Trump does not intend to re-quarantine the country according to the "spring sample". At the same time, an increase in the incidence rate continues to put pressure on the dollar, as a lockdown can be introduced locally. And given the fact that 33 states of the country reported outbreaks of the epidemic, it is not difficult to draw obvious conclusions.
Thus, coronavirus is still a problem for dollar bulls. If the daily increase in cases in the USA continues to show an upward trend, the dollar index will be under pressure. In addition, market participants are waiting for the publication of key macroeconomics.
For example, at the start of the American session tomorrow, the release of data on inflation in the United States is expected. Positive dynamics is expected here: the general consumer price index on a monthly basis in June should reach 0.6%, and it should accelerate to the same 0.6% in annual terms. Core inflation should also show growth: up to 0.1% on a monthly basis and up to 1.1% on an annualized basis. It is worth recalling that according to the latest Non Farms, salaries in May pretty seriously let us down. The level of average hourly wages on a monthly basis, firstly, remained in the negative area, and secondly, collapsed to a multi-year low of -1.2%. This suggests that one should not expect a surge in inflation in the near future. If tomorrow's data comes out worse than expected, the dollar will come under additional pressure.
From a technical point of view, the situation for the euro-dollar pair has not changed since Friday. The pair underwent a downward correction, but on the daily chart, it is still between the middle and upper lines of the Bollinger Bands indicator, as well as above all the lines of the Ichimoku indicator, which still shows the bullish signal "Parade of Lines". All this suggests that the pair retains the potential for its further growth - at least to the first resistance level of 1.1350 (the upper line of the Bollinger Bands indicator on D1).
