EUR/USD continues upward trend as markets hesitate

The US dollar found itself dipping in the foreign exchange markets on Monday as traders around the world looked nervously ahead to a week or so of potential market-moving events.

Traders appeared to be waiting for the release of some key economic data from the US later in the week before they made firm decisions about which direction to go in.

Some of these releases were coming from the US, with consumer inflation figures covering the month of June due to come out on Tuesday.

In a similar consumer-related vein, retail sales information will be out closer to the end of the week.

The wider economic picture in the US will be assessed thanks to the start of the corporate earning period in the country, which begins this week – and will assess how the health of American firms looks set to bear up.

The greenback was especially down against the single European currency amid all this uncertainty for the world’s largest economy and its currency.

In this pair, the observed rise for the euro was a quarter of a percentage point, leaving the euro at $1.1329.

As traders at the broker CityIndex and others observed, this reflected an extended positive trend for the euro in the pair.

However, the short-term prospects for the euro remain complex due to political events on the horizon.

A European Union summit will take place later this week, and leaders from across the bloc look set to discuss thorny issues relating to financial contributions.

One suggestion has been to cut the size of the EU-wide budget over the course of a six-year period from next year – a move that could potentially assuage the fears of some of the northern countries such as Germany.

Elsewhere, the Australian dollar was up by 0.3% over the course of the day.

Sterling also went up by 0.3% as trading kicked off for the week.

It was spotted at $1.2656 at one stage.

Rises in these currencies tend to be interpreted as signs of risk-on movements for the forex markets, given that traders have traditionally flocked to other currencies during times of tumult.

However, in a sign that realignment could be about to occur in the forex markets, rises in these currencies were accompanied by a rise in signs of traditional safe havens.

The Japanese yen, for example, was up against the dollar.

The greenback was seen at 106.83 in this pair, which was close to its worst position for a fortnight.

Should such a realignment occur, it may well be attributed to the impact of the global coronavirus pandemic, which has had far-reaching economic consequences beyond the public health ones.

In China, the yuan was up slightly over the course of the day.

It was seen rising by 0.15% at one stage, reaching 6.9987 to the dollar as trading commenced.

There is a perception in the markets that the Chinese recovery from the coronavirus is now largely underway.