US Dollar Rallies as Economic Data Supports Hopes For Faster Recovery
The US dollar is all set to close the week in green, boosted by rising expectations for the US to post a faster economic recovery than other parts of the world. At the time of writing, the US dollar index DXY is trading around 91.45, close to the highest levels seen in two months.
Economic data released from the US over the previous sessions has bolstered investor confidence in the world’s largest economy, strengthening the greenback even as the risk sentiment improves. In the past few months, the US dollar has traded against the market sentiment, strengthening during a risk-off mood and seeing a sell-off when the risk appetite improved among traders.
Analysts had originally forecast an extended period of weakness for the reserve currency into 2021 on the back of a dovish Fed that plans to maintain low interest rates and monetary easing until the US economy returns to pre-pandemic levels. However, the sentiment has since turned around as the US economy posts better figures than most other parts of the world, causing the US dollar to strengthen against its major peers, especially the Euro.
So far this week, the dollar has strengthened by 1.1% against most of its rivals, a better gain than the 0.3% rise seen during the previous week. Later today, the greenback could experience some volatility on the release of the employment report from the US.
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