The US dollar is trading bearish in early trading on Friday, driven lower as the market sentiment improves on the back of better than expected economic data from the US, weakening the safe haven appeal of the reserve currency. At the time of writing, the US dollar index DXY is trading around 90.71.

US stock markets also turned around during the previous session as corporate earnings reports revealed a better performance than previously anticipated. Despite the current weakness, the US dollar is set to post a gain of around 0.4% so far this week, as a result of possible delays and reductions in President Biden’s proposed stimulus package.

Analysts foresee an extended period of weakness for the US dollar into 2021 after the Fed maintained that it would continue with its low interest rates and monetary easing until the US economy recovers to pre-pandemic levels. In 2020, the greenback weakened by almost 7% against its major peers after the Fed brought interest rates close to zero to support the economy through the coronavirus crisis.

The Euro and the AUD are trading steady against the dollar early on Friday after trading bullish during the previous session. Meanwhile, the safe haven Japanese yen continues to weaken against the reserve currency, following a 0.2% loss on Thursday.