US Dollar’s Appeal Weakens as Traders Turn to Riskier Currencies - Forex News by FX Leaders
US Dollar's Appeal Weakens as Traders Turn to Riskier Currencies

US Dollar’s Appeal Weakens as Traders Turn to Riskier Currencies

Posted Wednesday, February 24, 2021 by
Arslan Butt • 1 min read

The US dollar is trading bearish on Wednesday, falling to the lowest level seen in three years against commodity currencies and the GBP as the market sentiment improves over rising hopes for the global economy to recover from the pandemic-driven downturn. At the time of writing, the US dollar index DXY is trading around 90.05.

During the previous session, Fed chair Jerome Powell once again stated the central bank’s intent to hold interest rates close to zero and continue with its bond purchase program until the US economy makes a full recovery. The extended dovishness of the Fed is likely to keep exerting downward pressure on the US dollar in the near future.

Meanwhile, the optimistic mood in global markets is driving investors away from the safety of the greenback and towards riskier currencies that could gain the most from an improvement in the overall economic outlook and global trade. Countries that are rapidly rolling out the COVID-19 vaccines and could see their economies rebound faster are also seeing greater interest in their respective currencies among traders.

In addition, the positive mood has also driven up prices of commodities across the world, which has boosted the appeal of commodity currencies, especially the AUD and NZD. The GBP, meanwhile, has been trading strong on the back of vaccine optimism driving up hopes for easing of lockdowns and restrictions.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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