13, September 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

The dollar has weakened since Wednesday after the United States abstained from the planned military strikes against Syria, which they would apply because of the alleged use of chemical weapons in the civil war. The dollar fell sharply after U.S. President Barack Obama said his administration would support Russia's plan to take from Syria chemical weapons and in return, the U.S. would refrain from military strikes.

Shrinking fears that the military campaign in the Middle East led investors to shift money out of the safe-haven currency, which is the dollar, to higher-yielding assets.

The dollar also came under pressure amid continuing doubts about whether the Federal Reserve will announce at its meeting on September 17-18 to start narrowing the monthly purchase program by 85 billion USD of assets, which weakens the dollar, to speed up the recovery process.

Weak economic indicators convinced many investors that the U.S. central bank may delay the planned start of minimizing asset purchases, while others believe the start date of minimizing is September, but very few believe that it will support the dollar's weakness.

The pound strengthened after official data showed that the UK unemployment rate fell to 7.7% in the three months to July, from 7.8% in the previous three months.

Analysts had expected the unemployment rate would remain unchanged.

The number of unemployment benefits in the UK fell by 32,600 in August, better than what is required to reduce unemployment - 22 000.

The data raised expectations that the Bank of England may raise interest rates sooner than stated.