On Monday, the single currency exchange rate rose against the dollar to the level of 1.1812.
Economic data from the US was below expectations. Sales of new homes fell to 676,000, below the expected 800,000. The index of business activity in the manufacturing sector from the Federal Reserve Bank of Dallas for July fell to 27.3 points. An improvement in risk sentiment could also weaken the US dollar. The Nasdaq index reached a new record high, and the Dow Jones fell by 0.21%. The yield on 10-year Treasury bonds recovered to 1.27%, but this did not help the US currency to restore intraday positions.
For the first time since March 2020, short-term traders have become net buyers of the dollar. The latest report of the commodity futures Commission showed that large speculative bets on the purchase of the euro, the Canadian dollar and the pound sterling fell, which helped weaken the cumulative net short position on the dollar. Euro contracts fell to levels last seen 16 months ago. This is happening as the dollar's prospects have become more opaque against the background of hawkish signals from the Fed, despite the threat to economic growth, a double deficit and the debt ceiling problem looming on the horizon again. Demand for safe-haven assets will limit the dollar's decline amid fears that a new variant of the virus will hinder the recovery of global growth.
The main focus will be on the Fed and the consideration of whether strong inflation data will cause talk about the need to wind down the quantitative easing program as soon as possible. This could be the next catalyst for the growth of the dollar, and speculators foresee a strengthening of the currency, since they abandoned the net bid for sale for 2021.
The forecast expects a decline in the Euro/Dollar exchange rate to the levels of 1.1800, 1.1775 and 1.1750.