The fallout from this crisis roiled the entire currency markets. The euro-dollar pair remained under the 1.1650 level as traders looked ahead to an important data calendar in the US. The pair is now under extreme bearish pressure. This transition reflects a historic level of market sentiment heavily favoring the US dollar given an ever-shifting economic backdrop.
The pound vs US dollar exchange rate has suffered one of its biggest falls, nose diving under 1.3400. The continuing chaos in the UK bond market is largely responsible for this decline. It’s hugely exacerbating the challenges faced by the Pound Sterling. Consequently, GBP/USD has pushed further into daily losses, plunging to its lowest level since early August.
As for the US dollar, it has mounted a muscular comeback. At the same time, this resurgence has largely stifled the upward movement of XAU/USD, which represents the price of gold in US dollars. After a recent upward spike that took gold to all-time highs above $3,500, the yellow metal has now retreated. Though gold has pulled back, the yellow metal has managed to maintain its footing in positive ground. Investors see it as a safe haven, particularly once it reached its all-time high.
Market analysts note that the surging long-dated UK gilt yields have significantly unnerved investors, smashing the Pound Sterling in recent trading sessions. In particular, traders will be keeping a close eye on the soon-to-be-released US ISM Manufacturing PMI. They actually believe that it will move the markets in important ways.
Alongside the ongoing impact of the Russia/Ukraine conflict, the currency fluctuations with the EUR/USD pair has clearly caused a lot of turbulence throughout the markets. This volatility comes on the heels of private-sector questioning of President Trump’s economic record. Unfortunately, this controversy has introduced a lot of confusion and added to the negative impact on trader sentiment.
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Professional forex traders have one of the highest barriers to entry. They have to smartly dodge the ongoing tumultuous economic environments. Now the attention has turned to crucial US economic indicators. We need to wait and watch how these fundamental drivers play out and impact currency markets in the next days to come.