The US dollar extends its strong mood into the start of a brand new trading week as its safe haven appeal remains supported by escalating worries about the spread of fresh COVID-19 cases around the world and its impact on global economic recovery. At the time of writing, the US dollar index DXY is trading at around 93.36.

Over the past several weeks, the greenback had been trading bullish against other leading currencies as a slew of positive economic data supported Fed officials’ comments for faster withdrawal of stimulus initiatives. This would make the US one of the first among the leading economies to confidently work its way back towards growth and pull back on stimulus measures.

The steadily increasing daily caseload in the US has forced the Fed to host its annual Jackson Hole symposium scheduled for later this week in a virtual format. All eyes will be on the event as investors cautiously await clues on when the US central bank could start tapering its asset purchases.

However, there is considerable uncertainty on whether the Fed will overturn its dovish stance anytime soon, especially as the delta variant spreads through the country. Although, some economists feel that even if the Fed does delay its plans to ease back on asset purchases, the US dollar would continue to trade bullish as the risk-off mood would bolster its appeal as a safe haven currency against other riskier currencies of economies that are faring much worse.

Commodity currencies AUD and NZD have been particularly hard hit as both nations report an increase in COVID-19 cases after being among the first to bring the pandemic under control. The delta variant has caused several countries to bring back restrictions, hurting economic activity and clouding the outlook for recovery.