The US Dollar has been on a downward trend since the FED raised interest rates by 25 basis points. Dovish comments from FOMC members did little to wet investor appetite for the US Dollar, but something more pertinent could be taking form.
Sentiment around the US Dollar is turning negative as markets weigh up the potential risks surrounding the newly appointed President, and allegations of Russian involvement in the 2016 Presidential race. Bookmakers have already begun to slash odds of Trump’s impeachment or resignation in his first term, which comes off the back of comments echoed by Democrat Dianne Feinstein yesterday.
These two outcomes do not seem that unlikely, if the FBI can prove collusion between the Russians and Trump then this could set the scene for his removal from office. On the other hand, as Donald Trump grows increasingly frustrated with the role as President, he may equally decide to resign.
His second travel ban has already been blocked by judges which has resulted in Trump taking to Twitter to express his frustration at the outcome.
The Euro has strengthened a cent against the US Dollar since the beginning of the trading week, with EUR/USD sat range bound at 1.08 at the time of writing.
Fed’s Yellen to testify to congress
On Thursday at noon GMT Janet Yellen will testify to congress where US Dollar investors will be watching keenly for future monetary policy guidance. There has been suggestions for two further hikes this year and investors will be looking to determine whether the next hike will occur this side of the year.
There could be further movements for the US Dollar if Yellen appears dovish towards the US economy, further dampening appetite for the US Dollar.