Dollar Set to Snap Four-Session Win Streak, But Downtrend Limited, Experts Say

Investing.com – The dollar looked set to snap a four-session winning streak on Monday, but analysts warn that the path lower for the greenback will run out of road as the Covid-19 pandemic's lasting impact on the global economy will renew safe-haven demand. 

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.52%, to 97.03. The dollar has fallen nearly 7% from its highs in mid-March.

"As the pandemic sweeps on through Latin America, the global economy isn't out of the woods yet, and I suspect we need to see the worst of the global picture before we can see a long-term dollar downtrend start properly," Societe Generale (OTC:SCGLY) said.

The fall in the dollar on Monday was driven by a "technical correction" following Friday's rally, led by demand related to option and future expiries, the bank added.

The warning against bearish bets on the greenback comes days after data on Friday, showed the traders increased their net short dollar position, according to calculations by Reuters and U.S. Commodity Futures Trading Commission.

The value of the net short dollar position climbed to $15.69 billion in the week ended June 16, from net shorts of $9.51 billion the previous week.

The dollar was also dragged lower by losses against the pound and euro as risk-on sentiment kept a lid on safe-haven demand.

GBP/USD rose 0.89%, to $1.2466, and EUR/USD, which accounts for about half of the weighting of the dollar index, rose 0.75%, to $1.1258.

Source: https://tinyurl.com/ycaerqrc

This article was originally published on investing.com

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