The dollar index increased by 0.1% amid tech sell-offs

The dollar increased on Wednesday amid the strong sell in the US equity markets. It has directed traders to leave riskier currencies in favor of the world reserve currency. 

The dollar index climbed by 0.1% to 93.562. Past week, the currency has experienced a 1% increase from the lows of 2 years it has posted earlier this month.

Moh Siong Sim, a currency analyst at Bank of Singapore, said that the tech sell-offs caught the market by surprise. He thinks it could cause further implications. 

Euro is likely to drop further

The pair EUR/USD decreased by 0.1% to the level of 1.1768, retreating further away from the 1.20 area last week.

As the ECB meeting on Thursday is approaching, investors are looking forward to any comment on the euro since the currency still expands its gains of 10%. The last most significant dip of the euro occurred in March, before the coronavirus pandemic’s containment measures.

According to Analysts, it is too early for the European Central Bank to lower the euro with its speech this Thursday. They expect Christine Legarde, the ECB president, to highlight that the central bank is closely watching the euro while repeating that the exchange rate is not seen as a target. 

Brexit trade deal talks caused the GBP to drop

Brexit trade deal negotiations have brought GBP to levels not seen since last July. GBP/USD dropped by 0.4% to $1.2939. Meanwhile, the EUR/GBP increased by 0.3% to 0.9093.

On Wednesday, the United Kingdom will establish its plan outside of the EU. A minister in the House of Commons stated that the country is preparing legislation that would violate international law in a specific and limited way.

European circles are not likely to receive this favorably. It is expected that the post-Brexit transaction period will end disorderly at the end of 2020. However, analysts still believe that there is a significant chance to reach a deal.