USD edges lower amid G20 meeting

The US Dollar is showing very little movement on Monday, despite geopolitical tensions rising ahead of the G20 meeting. The Biden administration’s approval of long-range US missile use by Ukraine against Russian targets has increased global concerns. While the US Dollar Index (DXY) remains above 106.50, the economic calendar for the day is relatively quiet, with only a speech by Fed Bank of Chicago President Austan Goolsbee scheduled.

Investors are closely watching the G20 meeting, where Ukraine is expected to be a major topic of discussion. Recent events, such as the phone call between German Chancellor Olaf Scholz and Russian President Vladimir Putin and Russia’s missile and drone attacks on Ukraine, have heightened tensions. The US response, authorizing the use of long-range missiles, further escalates the situation.

Despite the geopolitical backdrop, the US economic calendar is relatively calm. The only significant event is Goolsbee’s speech, which may provide insights into the Fed’s monetary policy stance. However, the market’s focus remains on the G20 meeting and its potential impact on global markets.

The US Dollar Index has been on an upward trend in recent weeks, reaching a new yearly high above 107.00. However, it has faced resistance at this level and may consolidate before potentially moving higher. Support levels for the DXY are located at 105.93 and 105.53.

The Fed’s monetary policy decisions continue to influence the US Dollar. By adjusting interest rates, the Fed can impact borrowing costs and inflation, which in turn affects the currency’s value. While the Fed is expected to raise interest rates in the near term, the market is also pricing in potential rate cuts in the future.
As the G20 meeting unfolds and geopolitical tensions continue to escalate, the US Dollar may experience increased volatility. Investors should closely monitor developments and adjust their positions accordingly.