US Dollar Strengthens Against Major Currencies Due to a Dovish ECB

The US dollar is trading strong against its major peers early on Friday after the ECB sounded more dovish than markets had anticipated during its latest monetary policy meeting in the previous session. At the time of writing, the US dollar index DXY is trading around 97.71.

As widely expected, the European Central Bank announced to hold its monetary policy steady but stressed that the Eurozone economy still faced downside risks. In addition, ECB President Christine Lagarde admitted that inflation was yet to reach the central bank’s target despite prolonged quantitative easing and negative interest rates.

This served to highlight the weakness in Europe’s economy even as the US economy appears to post moderate growth amid strong economic data releases lately. The US dollar has also strengthened as a result of the risk-off sentiment in global markets over concerns of the coronavirus epidemic.

Worries that the outbreak could impact China’s economic growth have weakened the Chinese yuan as well as other risk currencies like the AUD and the NZD.