The reasons why the USD is selling off

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The Dollar (USD) downside pressure has intensified again since last week's Fed Chair Powell speech. As a reminder; The Federal Reserve's new policy framework sees them focusing on longer-term inflation targets, which they are nowhere near reaching. It is forcing markets to anticipate further that U.S. rates will stay lower for longer than other countries.

Additionally, given the drastic move by the FOMC and compared to other major central banks with their respective policies, this shows the dollar is in a downtrend that will last for some time. Low rates and an excess supply of dollars are driving this move.

Before the above-detailed the USD had already been in a downward trend, due to the FOMC actions, but also consider the below:

Economic data - There had been very encouraging signs of a global economic rebound, as shown with a decent run of data. Since the reopening across the globe, following lockdowns, many key sectors have been demonstrating good activity. Manufacturing and Services PMIs were pushing back into growth territory after contracting for some time, given the lockdowns.

The U.S. covid cases - Cases of covid in the United States had aggressively been rising through the months of May-August, in comparison to other economies that had contained it.

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