20.10.202016:10 Forex Analysis & Reviews: US dollar plunges deeper amid multiple crises in the US

No serious movements were noted on the USD index against the euro and the Japanese yen on Tuesday morning. Market participants are mainly pressured against the background of the unsettled negotiations on the stimulus package in the US.

The complexity of the situation is that the parties cannot reach a consensus on the overall scope of the incentive package, and the differences in views are quite large. Despite the call of congressional representatives to speed up the decision-making process, the issue is still open, and it is likely that the agreement will not be signed before the presidential election.

Thus, investors are beginning to realize that the next appointed U.S. President will take incentive measures. In this situation, the tension is only growing, and uncertainties are growing. This would naturally put significant pressure on the greenback.

In addition, it became known that the People's Bank of China decided not to change the base interest rate on loans, as analysts had suggested. For the past six months, the rate has remained the same (at the level of 3.85% per annum). Recall that the last change occurred in April of this year. All this indicates growing confidence and a planned recovery of the country's economy after the consequences of the coronavirus pandemic.

The aussie also showed negative dynamics on Tuesday. The state's chief regulator held a meeting on the ratification of a new additional stimulus related to the easing of monetary policy in order to maintain a weak economy, as well as the labor market, which continues to experience particular difficulties amid the crisis.

Meanwhile, the value of the euro moved to $1.1772 in the morning while the previous value was at $1.1769. The value of the USD against the Japanese yen also changed but not so significant with an increase of 0.08%, that is, from the mark of £105.43, it moved to the area of £105.51.

The euro against the yen rose by 0.09%, which moved it to the level of £124.21 per euro, and yesterday's rate was £124.10 per euro.

The sterling against the US dollar remains almost unchanged with an exchange rate of $1.2945 per pound. On Monday, the value consolidated at around $1.2948 per pound. A stable rate was also recorded against the euro, on Tuesday, it is worth €1.0998 per pound, while on Monday it was trading at €1.1000 per pound.

The US dollar has grown well against the Australian dollar. An increase of 0.55% was noted, and the current rate is $0.7035 per aussie.

The USD index in relation to a basket of six major world currencies reduced by 0.04% on Tuesday. And against a basket of sixteen major world currencies, it went up by 0.7%.

The initial estimates regarding the further movement of the greenback look extremely disappointing. According to most experts, the greenback will not be able to overcome negative pressure from the outside in the coming year and will intensively reduce its positions. Moreover, the rate drop can be sharp and rapid, without the possibility of a reverse rollback. In this regard, the long-term outlook for the US dollar does not look attractive at all.