The U.S. dollar plunged to its lowest point in a week on Tuesday as traders become doubtful about the scale of a recent rally. Expectations of a faster coronavirus pandemic recovery in the United States than elsewhere boosted the currencies to record highs last week.
Meanwhile, the spotlight remained on Bitcoin as it hit a record level above $47,000, building on an almost 20% surge overnight after Tesla Inc stated about a $1.5 billion investment in the digital asset.
The dollar index declined by 0.2% to 90.75 in the Asian session and tumbled down to 90.963 for the first time since Feb. 1. Since Friday, the greenback has been in retreat when lower-than-expected jobs data halted a two-week run that had boosted the currency to a more than two-month high of 91.6.
Traders had pushed up the greenback due to a faster U.S. vaccine rollout compared to most other countries. At the same time, Democrats moved to fast-track President Joe Biden’s $1.9 trillion coronavirus relief package.
However, many analysts think that massive fiscal spending, along with continued ultra-easy Federal Reserve monetary policy, will drag the dollar down in the longer term.
Joseph Capurso, Commonwealth Bank of Australia currency analyst, noted that a large stimulus is highly likely to pass soon, and it will weigh on the USD.
He added that Europe’s lagging Covid-19 vaccination program would probably cap the euro near-term. But the continent should catch up by the summer, and after that, the single currency could surge forward to $1.28 for the first time since 2014.
On Tuesday, the euro soared by 0.2% to $1.20775, jumping from the two-month low of $1.9520 it touched on Friday.
What about the British pound?
The sterling also skyrocketed to its highs by climbing to $1.3784 in Asia. It exchanged hands higher by 0.3% at $1.3774 at last.
Meanwhile, the dollar plummeted down by 0.3% to 104.925 Japanese yen, after soaring to 105.765 at the end of last week for the first time since October.
Riskier currencies also increased during the last session. The Australian dollar surged forward by 0.3% to 77.252 U.S. cents. At the same time, the New Zealand dollar climbed up by 0.4% to 72.47 U.S. cents.
On Tuesday, strategist Imre Speizer stated that Westpac seems to target an advance to 75 U.S. cents for New Zealand’s currency. According to the analyst, markets have acknowledged New Zealand’s successful coronavirus management, along with ensuing economic recovery. However, recent economic data has surprised even the most optimistic traders.
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