Analysis of the past day

On Wednesday, January 24, the US dollar weakened across the entire spectrum of the market, prompted by comments from the US Treasury Secretary at the Davos summit that a weak dollar is useful for the US economic growth and trade. Thus, confirming that the US government benefits from a weak national currency for the development of trade relations. As a result, the US dollar index has renewed the three-year minimum against its main competitors, and thus caused the collapse of Europe’s stock indices.

Thus, the European stock indices are traded below zero after the multidirectional fluctuations in the Asian session (Nikkei 225 -0.81, DAX-0.35, FTSE 100 -0.85, Dow 30 +0.60). At the same time, commodity assets remain above zero, helped by the positive dynamics of oil in the reduction of oil reserves in the United States. In turn, the US stock indices remain in the black at the possibility of developing the US trade relations.

After a swift sale of the US dollar, the American index is limited to the level of support 89.00 and tries to adjust for oversold. Also, further decline in the US currency will be difficult due to expectations of the results of the ECB meeting. Before  it the investors will prefer to take a waiting position.

Graph of the US dollar index. Current price – 89.20

Hanzenko Anton