US Dollar looking sharper as risk aversion intensifies, global PMI data disappoints| Hassan Maishera

The Greenback rallied against the leading currencies in the world on Wednesday. This comes as risk aversion in the forex market intensifies as investors fear the rising Coronavirus infections in Europe, the United States, and other parts of the world. Another major reason for the US Dollar rally was the poor global PMI data that shows that business activity across several advanced economies is declining.

The EUR/USD pair is currently indicating a bearish outlook as the Coronavirus cases in Europe pushed investors towards the US Dollar. The selling pressure on the EUR/USD pair might increase after the pair cleared a key technical threshold. This could result in further losses for the Euro and potentially start a deep reversal. The EUR/USD paused between the critical support range of 1.1698 and 1.1720 yesterday. However, EUR/USD has broken that barrier and is currently trading at 1.1650 at the moment.

The Greenback is rallying despite the US presidential elections just 41 days away. Fresh polling data on Wednesday, September 23, shows that Former Vice President and Democratic nominee Joe Biden is strongly leading President Donald Trump in general election forecasts. The fact that President Trump is currently behind in forecast data hasnt slowed down the US Dollar as investors flock it.

If the selling pressure on the EUR/USD pair continues, then the pair could be looking to test the March resistance-turned-support at 1.1448. However, the pair may pause from the bearish movement if the number of buyers overwhelms the sellers. Hence, putting a pause to the selloff.

Another key reason for the Greenback rally is the disappointing global PMI figures. The global PMI data released by HIS Markit shows that business activities in various advanced economies around the world are declining. The US economy performed better than that of the Eurozone. US PMI data saw the manufacturing sector improve from 53.1 to 53.5 last month. However, the Eurozone PMI data declined to 50.1 from 51.9 reported previously.

The US Dollar also performed excellently against its Canadian counterpart. The USD/CAD trading pair has been on a bullish run in recent days, and it continued it today. At the moment, the USD/CAD pair is just shy of hitting its six weeks high of 1.3400. During the early trading hours of September 24, USD/CAD was trading at 1.3394, thanks to the renewed weakness in global oil prices.

At the moment, WTI is battling a fresh session low of $39.13 as oil demands decline due to economic woes in Europe and the United States. The Loonie (CAD) is heavily dependent on the performance of crude oil, and the continued oil price weakness is affecting its performance against the Greenback.

If the oil price woes continue, then the USD/CAD pair might continue its bullish run. At the moment, the USD/CAD is looking to close in on the 100-day SMA, which stands at 1.3476. The 200-day SMA of 1.3523 also doesnt seem far away for the USD/CAD pair.

However, the USD/CAD pair might catch a break if the US Jobless Claims and Housing data underperforms. The broader market sentiment and the Greenback dynamics could be the key drivers behind the price action of the pair.

[About The Author]

Hassan is an expert writer and analyst on the financial markets,

with expertise in cryptocurrencies, forex, stocks, and CFDs. With more

than four years of experience, Hassan is a popular writer in fundamental

analysis, trading guides, and news contents.

He has worked for various forex, stock, and cryptocurrency blogs

including; blokt.com, coinjounal.net, stockdork.com,

forexschoolonline.com, forexsignal.com, and more. Hassan currently works

as a financial markets and cryptocurrency writer.

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