US Dollar Recovers After Dipping in Reaction to WTI Crude Oil Slipping Below 0
Early on Tuesday, the US dollar has recovered after retreating lower as a result of the crash in WTI crude oil prices to historic lows below 0 during the previous session. At the time of writing, the US dollar index DXY is trading around 100.17.
The US dollar is likely to remain supported, however, as a safe haven currency amid heightened economic uncertainty driven by the ongoing coronavirus pandemic worldwide. The crash in crude oil prices amid escalating worries about a supply glut is likely to hit stock markets, oil companies and several economies hard, raising recession worries.
For now, however, gains in the US dollar remain limited as a result of the significant QE measures undertaken by the Fed to maintain liquidity in global financial markets. However, with the world likely to remain in a state of lockdown for longer than previously expected, the greenback is likely to remain in favor over other riskier currencies and instruments.
Meanwhile, protests rage on in various parts of the US against the lockdown even as Trump maintains his interest in restarting economic activity across the country. The US economy is likely to be severely impacted by the ongoing shutdowns and rising unemployment levels, adding to worries for Trump during this election year.
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