Will the dollar continue to fall?

By 07/06/2021News

Gold  1887,10

EURUSD   1,2164

DJIA  34731,50

OIL.WTI  69,365

DAX   15695,50

The US unemployment figures for May were published on Friday. It was slightly worse than analysts’ expectations. However, not as nightmarish as in the previous month. But even that was enough for the US dollar to start falling against all currencies.



The chart above shows the dollar index (DXY). From a technical point of view, nothing serious has happened yet. Only the short-term uptrend has stopped. On the fundamental side, however, all is not so good. The big investors realise that such unemployment figures prevent the Fed from even talking about stopping the printing press.
This means that inflation growth in the USA will at least not decrease but rather accelerate further in the coming months. Recall that so far it is industrial goods and raw materials which are rising the most. Only with a lag of a few months will it have an effect on consumer goods. For example new cars, computers, everyday consumer goods.
It’s only fair that everyone wants to protect their money from inflation. There aren’t many options left. If you want to invest your depreciating dollars in real estate, it is already too late. It is already appreciating at a record pace.
Investors and traders are looking at more stable currencies, as well as the comodities, which have not had time to increase in value much. A great option is to buy the yellow metal, which actually becomes an alternative to fiat currencies.
But the real question about the future of the American dollar will be if the Dollar index breaks through 89. The chart will open an abyss, which can fall into for a very long time, without seeing any support.
What can stop this process? Apart from good labour market data, which we may see in the coming months, it is worth keeping in mind the seasonal factor. Summer and a couple of holidays are starting. This could reduce the amplitude of the fluctuations in the markets, putting them in a flat.

08.00 German factory orders for April
08.30 Swiss consumer price index for May

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.