China/US trade tensions to re-emerge, could lead to renewed USD support - Rabobank

Felipe Erazo FXStreet

Analysts at Rabobank believe that USD strength has repeatedly confounded market expectations since early last year and there are reasons to suspect that this may continue for a while amid US-China trade tensions.

Key quotes

"The fact that USD strength has repeatedly confounded market expectations since early last year begs the question as to whether the factors that are underpinning the USD have undergone an adjustment in recent years."

"We argue that there have been changes in the market dynamics behind the USD."

"Consequently, we would suggest that there is a strong chance that USD strength is likely to continue perplexing the market at least over the next year or so."

Author

Felipe Erazo

FXStreet

Born in Colombia, Felipe Erazo is the American Session Manager at FXStreet. He has been studying journalism with a degree in social communication at the Universidad de Chile.

EUR/USD: Gains remain capped by 1.1650

EUR/USD remains in recovery-mode following the closing bell in Euroland on Wednesday, hovering around the 1.1650 zone amid renewed downside pressure on the US Dollar and a marginal improvement in the global sentiment.

GBP/USD appears bid around 1.3370

GBP/USD reverses part of its recent multi-day decline, gathering some balance and managing to reach the 1.3400 region, where some initial resistance seems to have turned up. Cable’s uptick comes in response to some loss of momentum in the Greenback despite the geopolitical scenario remaining fragile.

Gold recovers modestly despite intensifying Middle East crisis

Gold keeps its daily gains well in place, although a break above the $5,200 mark per troy ounce still remains elusive on Wednesday. The yellow metal’s rebound comes in response to the persistent flight-to-safety amid intense geopolitical tensions in the Middle East and the bearish performance of the US Dollar.