20.08.202013:25 Forex Analysis & Reviews: EUR / USD: dollar bears still determined despite disappointment on Fed minutes

On Wednesday, the USD index posted its strongest one-day gain since March, hitting 93.15 points and nearly 1% above its two-year low reached on Tuesday.

The dollar was able to win back some of its recent losses amid speculation that the recovery in the United States will ultimately help the national currency.

The day before, Reuters, citing a senior US official, reported that the White House and Congress Democrats want to conclude an agreement on a new stimulus package in the amount of $ 500 billion.

In addition, the minutes from the July Fed meeting was released Wednesday, which gave little clues as to whether further easing of the regulator's policy is possible in the fall, which disappointed some dollar bears.

The regulator noted the continuing uncertainty for the national economy, allowing the adoption of additional support measures, but did not provide information on specific details and possible timing.

Although the greenback is trying to hold on to its earlier gains on Thursday, many experts believe that the downturn that has sent the USD index down 10% since March is not over yet. According to them, the publication of the Fed minutes is unlikely to have a long-term impact on the markets.

"We tend to view yesterday's movement as a pause in the cycle of the weakening of the US currency," OCBC Bank specialists said.

"This pullback did not lead to a breakout of significant technical levels. Therefore, we are skeptical about the duration of this rebound, "they added.

Analysts of the Commonwealth Bank of Australia share a similar opinion.

"All that was needed to strengthen the greenback was a growth factor. That was the Fed protocol. Nevertheless, we expect that the dollar will continue to decline, as the rest of the world's economies, led by China, are recovering, "they said.

According to experts at Nomura, "In the short term, the factors for weakening the USD may be the adoption of a cut-back fiscal stimulus package in the United States, the Fed's super-soft monetary policy, a decrease in tensions between Washington and Beijing, and the November presidential elections in the United States. From the March peak levels, the American currency risks losing in price by 20%. "

They predict that the euro may rise to $ 1.25 against the US dollar next year.

After updating its two-year highs, the EUR / USD pair fell rather quickly under the strong support of 1.1840.

"Such a rapid reversal after the breakout of key levels looks very atypical. Further, the main currency pair will consolidate. We expect EUR / USD to trade in the 1.1740-1.1950 range over the next couple of weeks. Only a close below 1.1740 will signal the beginning of a sustained pullback in the euro, "said UOB strategists.