US Dollar on Track for Sharpest Monthly Decline in 10 Years

The US dollar has weakened to the lowest levels seen since two months on Friday following the release of the latest US GDP report which revealed a sharper than expected contraction in the world’s largest economy. At the time of writing, the US dollar index DXY is trading around 92.66.

Even as the coronavirus pandemic rages on across the world, the US dollar is expected to experience the steepest monthly fall seen in a decade during the month of July. Fears of a second wave of coronavirus further delaying any hopes of recovery in the US economy are weighing on the greenback and driving weakness in the currency that had previously gained as a safe haven currency during the initial weeks after the coronavirus spread.

The dollar has come under pressure lately after Fed chairman Jerome Powell highlighted that coronavirus cases rose in the US during mid-June, weakening consumer consumption further and adding more strain on the economy. Other Fed officials have also cautioned that any recovery in the US economy can only begin once the pandemic is brought under control.

President Donald Trump’s latest comments about possibly delaying the upcoming presidential elections beyond November have also heightened uncertainty in markets and sent the US dollar lower against other major currencies. On the other hand, the Euro received support and made gains against the dollar after EU leaders came to a consensus about the 750 billion euro economic recovery fund, raising optimism about stabilizing Eurozone economies.