US Dollar Trading Close to Two-Week Lows as Risk Appetite Improves

The US dollar continues to trade weak, holding close to the lowest level seen since two weeks, as the market sentiment improves over rising

Arslan Butt•Wednesday, February 10, 2021•1 min read

US Dollar Trading Close to Two-Week Lows as Risk Appetite Improves

Early on Wednesday, the US dollar continues to trade weak, holding close to the lowest level seen since two weeks, as the market sentiment improves over rising expectations for increased stimulus initiatives driving economic recovery following the coronavirus crisis. At the time of writing, the US dollar index DXY is trading around 90.37.

The safe haven appeal of the US dollar is diminishing as traders make their way towards riskier instruments on hopes that the global economy could rebound this year, supported by the rollout of COVID-19 vaccines. In addition, with most countries around the world having unleashed ample fiscal and monetary stimulus, economic recovery could begin sooner than and be faster than previously expected.

Meanwhile, markets continue to hold mixed feelings about President Biden’s next round of proposed fiscal stimulus for the US economy. While more stimulus measures could speed up US’s economic recovery, it could also drive reflation on a global level which could increase the risk appetite and send the US dollar weaker.

Since the beginning of this year, the dollar had regained some of its lost strength despite analysts forecasting an extended period of weakness in the reserve currency. However, the tide turned for the greenback at the end of last week following the release of a weaker than expected employment report which once again highlighted the impact of the pandemic on the economy.

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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.