US dollar slumps to multi-year low amidst improving market mood

Currencies Direct

The second half of November saw the market mood grow increasingly positive, resulting in further losses for the safe-haven US dollar. During this time, we've seen GBP/EUR fluctuate between 1.11 and 1.12 whilst EUR/GBP has held at 0.89. Meanwhile, GBP/USD has rallied from 1.31 to around 1.34, at the same time that EUR/USD has jumped from $1.18 to $1.19.

What's been happening?

A clear USD selling bias prevailed through the second half of November, with more positive coronavirus vaccine news, the beginning of the formal transition to the Biden presidency, and hopes for more US stimulus all contributing to an upbeat mood, which weighed on the safe-haven US dollar. This slump in the US dollar has directly benefitted the euro over the past couple of weeks due to the negative correlation between the pairing, allowing the single currency to accelerate in spite of some lacklustre data releases.

Meanwhile, the pound struggled to make any meaningful gains against the majority of its peers through the second half of November in response to Brexit anxiety.

What do you need to look out for?

Looking ahead, with less than a month left to negotiate a trade deal, talks between the UK and EU will be a key catalyst for the pound in December, with any setbacks likely to have disastrous consequences for Sterling.

Elsewhere we could see a third wave of coronavirus cases in the US take its toll on the US dollar, while EUR investors will be keeping an eye on European coronavirus statistics as more Eurozone countries look to ease restrictions.


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