Early on Friday, the US dollar trades on the backfoot after the Fed announced more stimulus measures to support small businesses affected by the coronavirus pandemic. At the time of writing, the US dollar index DXY is trading around 99.46.

The US dollar eased lower after the Fed announced $2.3 trillion worth of financial support to local governments and small and medium sized businesses who are at the forefront of the fight against coronavirus. This latest backstop move should cushion the US economy against the impact of the pandemic.

The safe haven appeal of the US dollar also diminished slightly over hopes that the rise in the number of infections is slowing down around the world. This has helped boost the risk sentiment in global markets, sending investors towards other instruments like commodity currencies instead.

However, there is still considerable anxiety among traders about the extent of economic damage the pandemic has caused worldwide. In addition, markets remain worried about the possibility of a resurgence of cases even as the death toll continues to climb higher.