US dollar falls to a two-year low as gold price breaks record

The US dollar declined sharply as traders reacted to the rising number of coronavirus cases in the US and the belief that the US economy will take longer than expected to recover. The currency declined by more than 0.6% against the euro, 0.8% against the Japanese yen, and by 0.65% against the British pound. Over the weekend, the number of coronavirus cases in the United States continued to rise. The country has confirmed more than 4.3 million cases and more than 131k deaths. Therefore, even after recent strong data from the country, analysts expect that the country will take longer to recover.

Gold and other metals rose sharply as traders continued to react to the lower real yields in the US and the increasing tensions between the US and China. In recent months, the yields of US treasuries have dropped significantly, leading many investors to put their money elsewhere. Further, over the weekend, China started military drills in the South China Sea, which is expected to irk US officials. This happened a few days after the two countries ordered the closure of each other’s embassies. It also happened after Mike Pompeo rebuked the Communist Party of China for its “authoritarian tendencies.” Meanwhile, data from the US showed that durable goods orders rose by 7.3% in June.

The euro rose sharply against the US dollar as investors reacted to positive economic data from Europe. Earlier today, data from Germany showed that businesses are optimistic about the bloc’s recovery. The business expectation rose to 97.0 from the previous 91.6 while the current assessment rose from the previous 81.3 to 84.5. Also, the business climate index rose to 86.3 to 90.5. This progress is happening a week after the bloc agreed to pass the then-controversial EU recovery fund bill.

EUR/USD

The EUR/USD pair rose to an intraday high of 1.1721, which is the highest it has been since September 2018. On the weekly chart, the price is above the 50-day and 100-day exponential moving averages. It is also along with the 38.2% Fibonacci retracement level. The RSI has moved close to the overbought level of 70. Therefore, the pair is likely to continue rising as bulls attempt to move to the 50% Fibonacci retracement level at 1.2163.

XAU/USD

The XAU/USD pair rose to an intraday high of 1942, which is the highest level ever recorded. The price is above all the short, medium, and long-term moving averages. Oscillators like the Relative Strength Index (RSI), Stochastics, and Money Flow Index (MFI) have moved to the overbought level. Also, the price is above the dots of the Parabolic SAR. Therefore, the pair is likely to continue rallying as bulls attempt to test the next resistance level at 2,000.

USD/JPY

The USD/JPY pair declined to an intraday low of 105.28, which is the lowest it has been since March this year. On the daily chart, the price is below the 50-day and 100-day exponential moving averages. It is also along with the lower band of the Bollinger Bands while the RSI has moved to the oversold level of 30. The same is true with the fast and slow lines of the Stochastic oscillator. Therefore, the pair is likely to continue falling as bears target moves below 105.