USD: No respite in sight - ING

USD: No respite in sight - ING

ING strategists note that the bar for any reversal in the dollar decline seems to be set rather high. 

"After the EU summit led to rises in the euro and cyclical currencies vs the US dollar last week, the dollar now faces a mix of geopolitical tensions and uncertainty about the US economic recovery."

"On the former, the US and China are now reciprocally closing their consulates in various cities, sparking concerns about the durability of the US-China trade deal."

"On the latter, the focus of the week will be on talks around the next US fiscal stimulus bill. Republicans have delayed the announcement of their stimulus package, with $600 a week payouts set to expire at the end of this week. Whether these payouts are extended (even partially) will be crucial for the near-term US growth outlook."

"At the FOMC Meeting on Wednesday, we expect the Fed to keep an accommodative stance in place, particularly given the recent rise in the US Covid-19 cases and the accompanying downside risk to the US economic outlook. The cautious Fed should keep the outlook for risk assets supported. See G10 FX Week Ahead for details."