US Dollar Finds Strength as Markets Worry About Pandemic’s Economic Impact

The US dollar is starting the fresh trading week on a firm footing, holding strong against its riskier counterparts, in the wake of worrying

Arslan Butt•Monday, January 25, 2021•1 min read

US Dollar Finds Strength as Markets Worry About Pandemic's Economic Impact

The US dollar is starting the fresh trading week on a firm footing, holding strong against its riskier counterparts, in the wake of worrying economic data releases from Europe heightening worries about the economic impact of the coronavirus pandemic across the world. At the time of writing, the US dollar index DXY is trading around 9

The strict lockdowns enforced across nurse parts of Europe recently hurt economic activity, affecting the services industry while the UK reported more troubles for its retail sector. The recent data supports the safe haven appeal of the US dollar against its major peers even as the UK government warns that the latest variant of coronavirus could have higher mortality, in addition to being more contagious.

The Euro, meanwhile, is holding steady against the greenback after making a 0.8% gain over the past week. The common currency is facing some pressure not only from disappointing economic data but also because of reports of political turmoil in Italy.

However, gains in the US dollar remain limited as markets continue to focus on the Biden administration’s commitment towards rolling out more fiscal stimulus initiatives for the US economy. The possibility of more stimulus from the government is also expected to boost the Fed’s dovish stance, which could further weaken the value of the dollar.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.