US dollar trades at 2-year low due to geopolitical and economic risks

On Monday evening, the US dollar accelerated its decline in pairs with major foreign exchange competitors amid growing concerns about the deterioration of relations between the US and China, as well as uncertainty over the impact of the pandemic on the country's economy. The dollar against the euro reached 1.1780, the lowest since September 2018.

Uncertainty remains in US-China relations due to the diplomatic conflict. We remind, that on July 21 the USA demanded from China to close the Consulate General in Houston. The Chinese Foreign Ministry called this decision a political provocation and promised to take retaliatory actions. As a result, on July 24, the Chinese Foreign Ministry demanded that the US Consulate General in Chengdu, Sichuan Province cease its activities.

Additional pressure on the American currency is exerted by the situation with the coronavirus in the United States. The number of cases in the country continues to grow steadily.

At the same time, the European currency is receiving support amid strong macroeconomic data: the business climate index in Germany in July rose to 90.5 points from the revised level of 86.3 points in June. In addition, investors continue to win back the results of the EU summit, following which a package was agreed upon to restore the European economy from the crisis caused by the coronavirus pandemic, totaling 750 billion euros.