FX.co ★ US dollar slightly stabilizes, future prospects still suggests resumption of decline

The US dollar remained stable against the euro, and also demonstrates a fairly good strengthening against the Japanese yen Monday morning. The dollar even slightly neutralized the fall that happened in the previous trading sessions.

Despite this, the greenback remains to have a few reasons to rejoice about. The new strategy of the US Federal Reserve, which was announced on Thursday last week, suggests that the inflation rate in the country may exceed the strategically important target of 2% during certain periods. At the same time, interest rates will remain at a low level for quite a long time, until the country's economy demonstrates confident stability and growth. All this is a growth factor for the sector of risky assets, which are practically all currencies of the Asian region, with the exception of the Japanese yen. Therefore, the US dollar will continue to be in a rather weak position, and soon its decline will resume.

The Fed's new monetary policy is focusing on a different approach to inflation targeting. In the long term, the target of 2% inflation remains, but in some periods it is allowed to exceed this indicator in order to maintain the overall balance in the future.

The Japanese yen moved to a negative position against the euro this morning. This is due to complex statistical data on the economic development of the state. The retail sales in the country declined by 3.3% in the second month of the summer, while in the previous month there was a huge increase of 13.1%. The current decline in the indicator is associated primarily with a jump in coronavirus infection in Japan.

Meanwhile, Industrial production in Japan rose by a record of 8% in the second month of the summer. At the same time, preliminary forecasts turned out to be much more modest with an expected increase of no more than 5.8%.

The euro, on the other hand, slightly moved down to the price level of $1.1902 per euro Monday morning. Note that at the end of the trading session on Friday, its value is $ 1.1903 per euro.

The US dollar, on the contrary, rose 0.26% against the Japanese yen. Thus, the value of the dollar at present is around 105.64 yen, while the previous trading closed at 105.37 yen.

The European currency increased against the Japanese by the same 0.26%. The current rate is 125.71 yen per euro, which was around 125.39 yen per euro on the previous trading.

On Friday, the dollar against the euro began to cost less by 0.7%. While the dollar against the yen declined by 1.1% over the same period.

The dollar index against a basket of six of the world's major currencies, including the euro, Swiss franc, Canadian dollar, Japanese yen, Swedish krona, and pound sterling fell 0.03% on Monday morning. While the dollar index against a basket of sixteen major world currencies, on the contrary, went up by 0.1%.