U.S. Dollar Weakens On Stimulus Concerns

The U.S. dollar slipped against its most major opponents in the European session on Wednesday, as concerns over the looming stimulus spending deadlock in Washington and growing U.S.-China tensions triggered a sell-off in the currency.

Republicans and Democrats differed significantly on stimulus package that recommended a payroll tax cut and funding for coronavirus tests and the CDC.

Republicans are planning to unveil a roughly $1 trillion bill, a stance that Democrats oppose.

In a White House briefing on Tuesday, U.S. President Donald Trump conceded that the coronavirus situation would "get worse before it gets better."

The death toll from coronavirus in the U.S. exceeded 1,000 on Tuesday, according to a data from Johns Hopkins University.

More than 65,000 new covid-19 cases has been recorded, adding to a nationwide tally of more than 3,874,000 since the pandemic began.

Tensions between the U.S. and China escalated further after the Trump administration ordered China to close its Consulate General in Houston.

China said that the move was unilaterally initiated by the U.S. and it would "react with firm countermeasures" if Washington didn't "revoke this erroneous decision."

The greenback retreated to 1.2730 against the pound, from a 2-day high of 1.2644 seen at 5:00 am ET. On the downside, 1.31 is likely seen as its next support level.

The greenback dropped to 1.1602 against the euro, its weakest level since October 2018. The greenback is likely to find support around the 1.18 level.

The greenback fell to 0.9301 against the franc for the first time since March 10. The greenback may find support around the 0.90 level.

The greenback slid to near a 7-month low of 0.6689 against the kiwi, more than 1-year low of 0.7183 against the aussie and near a 6-week low of 1.3419 against the loonie, after rising to 0.6632, 0.7112 and 1.3483, respectively in early deals. The next possible support for the greenback is seen around 0.68 against the kiwi, 0.74 against the aussie and 1.31 against the loonie.

In contrast, the greenback was up against the yen, at 107.15. If the currency rises further, it may find resistance around the 109.00 level.

The latest survey from Jibun Bank showed that the manufacturing sector in Japan continued to contract in July, albeit at a slightly slower pace, with a manufacturing PMI score of 42.6.

That's up from 40.1 in June, although it remains well beneath the boom-or-bust line of 50 that separates expansion from contraction.