After showing a moderate depreciation in value after the FOMC minutes report was published, the US dollar then returned to trading stronger and more significantly again on Thursday.
Market players are seen to be more interested in increasing their holdings of the US dollar as a safe-haven as the government shutdown in the United States (US) continues.
As the world’s reserve currency, investors are encouraged to shift capital flows to safe currencies in an atmosphere of market uncertainty that is also influenced by geopolitical risks in addition to the crises in Europe and Japan that are in focus.
The European currency clearly sank to its latest 9-week low, triggered by concerns in France following the resignation of Prime Minister Sébastien Lecornu, who was appointed less than a month ago.
Furthermore, with the momentum of the US dollar strengthening successfully maintained, the Euro is at risk of facing a more severe fall at the end of this week.
It is quite surprising for market analysts with the pattern of strengthening the US dollar when the recovery from the beginning of the week is expected to be only temporary and moderate.
However, the strengthening of the US dollar in the New York session yesterday shows that investor confidence in the currency is still high.
It is also possible that profit-taking activities will occur earlier with expectations of major risks hitting the US dollar again after this.
This is due to the government shutdown situation increasingly affecting the employment sector and will worsen the reading of data reports that are already delayed.
President Donald Trump has warned of implementing permanent cuts to Democratic-related programs during the prolonged government shutdown situation.
