However, it should be noted that global risks are still offset in favor of the dollar: the fears of trade wars and a slowdown in the growth of the global economy.

In these circumstances, beyond short-term fluctuations, the American currency still retains the potential to strengthen and exit the trading range of the recent months. August is considered to be a quiet month with low activity in capital markets, but at this time usually, the basis for the rally builds up for the next few months.

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The period of trading in the channel can quickly be changed by the rise of volatility, as it was in April after the consolidation in January-April when DXY had added 6% for a month and a half with almost no adjustments. A similar scope of movement this time will allow the dollar index to return to the psychologically important boundary of 100.

As we wrote yesterday, in the short-term the dollar growth can reduce inflationary pressure in the US and deter the Fed from an excessive tightening of monetary policy.

This article was written by FxPro