US Dollar Under Pressure as Markets Trade With Risk-on Sentiment
Arslan Butt • 1 min read
At the start of a fresh trading week, the US dollar has weakened against its major peers as markets adopt a cautiously optimistic tone towards reopening of economies driving recovery in the coming weeks. At the time of writing, the US dollar index DXY is trading around 98.04.
Commodity currencies and the euro have strengthened against the US dollar as the risk sentiment in global financial markets improves over hopes of the global economy heading towards recovery as countries lift lockdown measures and resume normal levels of operations. This has dented the safe haven appeal of the dollar and driven traders towards riskier instruments.
The safe haven appeal of the greenback also remains subdued for now as US-China tensions failed to escalate after China passed the national security legislation on Hong Kong last week. Traders had feared strong retaliation by the US against this move, but Trump’s reaction failed to raise the risk-off mood on Friday.
The US dollar index had one of the worst performing months during May and continues to trade under pressure. The greenback also traded bearish as markets focused on violent protests and riots that have broken out across the US over the weekend.