The US dollar is trading somewhat steady in early trading on Monday, finding some support from the uncertainty about whether the Fed will step in to reign in inflation if it overshoots the target as economic recovery gathers pace, but risks are tilted to the downside. At the time of writing, the US dollar index DXY is trading at around 90.20.

The safe haven appeal of the dollar has received a boost over worries of resurgence in coronavirus cases across Singapore and Taiwan, keeping commodity currencies AUD and NZD trading under pressure, as the mood in global markets turns more cautious. Against its key peers EUR and GBP, the greenback managed to post a slight rise, but is not too far from major support levels.

Later this week, the attention turns to minutes from the most recent Fed meeting that took place in April. Investors will keenly observe any comments from the central bank officials on inflation to see if the Fed has any plans to step in and hike interest rates sooner than anticipated if inflation heats up in the coming months.

With the Eurozone and the UK slated to recover rapidly from the coronavirus crisis, the appeal of the US currency has been waning as investors place their bets on the EUR and GBP respectively instead. On the other hand, with several Asian countries – especially India, in the grip of the latest wave of the pandemic, there is worry that global economic recovery efforts could be hampered and possibly delayed, keeping investors somewhat undecided about completely abandoning the US dollar, which remains in favor as a safe haven currency amid uncertainty.