The US dollar is trading close to the lowest levels seen since a week early on Thursday, as investors turn cautious ahead of the Fed’s Jackson Hole symposium and fears about severe economic impact due to the delta variant recede. At the time of writing, the US dollar index DXY is trading around 92.90.

This week, the mood in the markets was lifted after the US FDA granted full approval for the use of Pfizer/BioNTech’s COVID-19 vaccine – a move that many see will increase the vaccination rate and limit fresh outbreaks. According to latest news reports, the vaccine manufactured by Moderna is also likely to receive full approval in the coming weeks, which could further drive up the rollout of the vaccine and boost consumer confidence across the US.

The US dollar’s safe haven appeal came under pressure as a result and investors moved away from the reserve currency and towards riskier instruments. The uptick in investor confidence was evident from the performance of the equity markets, with both the S&P 500 and Nasdaq ending Wednesday on record highs.

All eyes will now be on Fed Chair Powell as he is due to speak at the upcoming symposium on Friday. Investors will closely monitor his speech for confirmation on a timeline by when the Fed can start tapering its asset purchase program, after weeks of Fed officials dropping hints that they were ready to reverse their dovish mood amid rapid progress being made by the US economy and labor market from the pandemic-inflicted downturn.

While these optimistic statements from central bank officials had raised the likelihood of the tapering process beginning within this year, the spread of the delta variant have been weighing on this mood, especially since the beginning of this week. Weak economic data releases had raised concerns that the delta variant’s spread could threaten economic recovery across the US and other countries, which could potentially scare the Fed to maintain its dovish stance for longer.