Dollar index hovers near 32-month low as US stimulus negotiations continue

• The dollar remains on the offer near multi-month lows against major currencies. 
• Congress leaders vow to reach the long-awaited stimulus deal this year.

The dollar index (DXY) consolidates near 32-month lows reached Tuesday as the US Congress doubles down on efforts to break the long-standing stimulus impasse. 

The DXY, which gauges the greenback’s value against majors, is currently trading near 90.48, having printed a low of 90.42 on Tuesday. That was the lowest level since April 2018. 

Senate Democratic leader Chuck Schumer was out on the wires a few minutes ago, stating that lawmakers are still talking on the coronavirus relief package and more talks are likely tonight (Tuesday, Eastern time). 

Early today, House of Representatives Speaker Nancy Pelosi, a Democrat, hosted Senate Majority Leader Mitch McConnell, a Republican, as well as Senate Democratic leader Chuck Schumer and House Republican leader Kevin McCarthy, at the 7:30 p.m. ET (0030 GMT) gathering for stimulus discussions. 

The negotiations have gone far too long, leaving the US economy vulnerable to downside shocks from the resurgence of coronavirus. Even so, risk assets have managed to stay bid, keeping the dollar under pressure. Expectations for global recovery on potential vaccines have kept investors from selling risk. 

However, if the fiscal impasse persists, the focus could shift to near-term economic risks, possibly leading to risk aversion and a bounce in the safe-haven greenback.

Congress leaders, however, have vowed to reach a stimulus deal this year, which could be attached to the government funding bill. Most investment banks expect the dollar to continue losing ground in 2021. 

Technical levels