Dollar corrects lower but remains the strongest

The dollar corrected extreme overbought conditions but remains the strongest currency across the FX board. It shed most ground during US trading hours amid solid Wall Streets gains.

The EUR/USD pair corrected up to 1.1920, holding nearby at the end of the end. ECBs President Christine Lagarde said that the outlook for the euro area economy is brightening as the pandemic situation improves but warned about the need to remain vigilant, adding that tightening would be premature.

The GBP/USD pair surged on the better market mood, ignoring comments from Prime Minister Boris Johnson. Johnson said that cases of the coronavirus Delta variant are still going up, adding that they need to be cautious on easing restrictions. He added that data is looking good ahead of the July 19 deadline, although noting that traveling will be “difficult.”

In the US, St. Louis Fed President James Bullard noted that they would not need the emergency policies anymore as the pandemic comes to a close, but added that low interest rates and low inflation rate era are not ending any time soon. Also, Dallas Fed President Robert Kaplan is in favor of “taking the foot off the accelerator sooner rather than later.”

AUD/USD trades around 0.7540, helped by the better performance of equities. USD/CAD shed over 100 pips on a daily basis, helped by the greenbacks corrective decline and soaring crude oil prices. WTI closed the day at $73.00 a barrel.

Gold prices posted a modest daily advance. Spot gold settled at $ 1,784 a troy ounce.