A couple of days after the Fed announced its second emergency rate cut within a month, the US dollar is trading steady and holding its strength against other major currencies amid the worsening market sentiment owing to the coronavirus pandemic. At the time of writing, the US dollar index DXY is trading around 98.14.

Although the Fed’s move did cause some weakness in the US dollar, analysts anticipate the greenback to remain stronger than other currencies over the heightened uncertainty in markets pushing investors towards the relative safety of the US currency. There is an increased need for cash and liquidity, causing a sense of sell-off among other instruments, but this sentiment continues to support the dollar as it remains in favor as a safe haven currency.

Even amid the prevailing risk-off mood in global markets, yields in the US dollar remain higher than those in the Eurozone and Japan. Amid rising uncertainty, volatility and a squeeze in funding the world over, the US dollar offers a sense of safety for investors.

Analysts remain optimistic about the outlook for the dollar, especially against commodity currencies, Asian currencies and other major peers like the Euro and the GBP. The Euro, on the other hand, is showing signs of weakness over the rapid rise in the number of coronavirus cases across the Eurozone and the higher likelihood of an economic recession in the Eurozone as a result.