The weakness in the US dollar persists into early trading on Thursday, keeping it close to the lowest levels seen in three weeks against its major rivals on the back of a decline in US Treasury yields and expectations for continued dovishness from the Fed. At the time of writing, the US dollar index DXY is trading around 91.68.

The Euro, meanwhile, is having somewhat of a bull run, making the most of this situation even though Europe remains affected by a third wave of the pandemic and lockdowns. So far this month, the common currency has strengthened by as much as 2.2% and has risen to a four-week high against the US dollar.

Investors are also turning away from the US dollar despite upbeat projections of rapid economic recovery over recent comments from Fed officials indicating that they plan to hold interest rates for a longer period of time. In recent weeks, the greenback and Treasury yields had climbed higher over worries about a spike in inflation, which has been played down by the central bank, indicating an extension of the dovish policy.

During the previous session, Fed chair Powell reiterated that the central bank will first taper down its monthly bond purchase program before making any changes to interest rates. His comments failed to make any impact as traders were expecting such a move from the Fed as the economy begins to recover.

Later today, the US dollar could experience some volatility on the release of weekly jobless claims figures as well as retail sales. A positive reading should reinforce hopes about speedy economic recovery and could send the reserve currency higher while disappointing figures could drive further weakness.