- Impending stimulus and risk rally keeps the US dollar under pressure.
- The dollar index consolidates below 91.00, having faced rejection at 91.60 on Friday.
The dollar index (DXY), which tracks the greenback’s value against majors, is on the defensive below 91.00, having dropped for the second straight trading day on Monday.
Driving the anti-risk USD lower are expectations for aggressive fiscal stimulus and the risk-on rally in the global stocks.
“The House should pass this [President Joe Biden’s $1.9 trillion stimulus] relief package over the next two weeks, and Biden hopes to have Senate approval and the final package signed by March 15. Although a higher minimum wage is off the table, a $1,400 stimulus check appears to be a done deal,” BK Asset Management’s Kathy Lien told CoinDesk, adding that more stimulus would lead to higher spending and deficit.
Global stocks continue to rise and are likely to remain bid, with the world flush with cash. “Easing pressure from the pandemic as the surge in cases after the holidays may also be encouraging risk-taking to extend the global equity rally,” Marc Chandler, Chief Market Strategist at Bannockburn Global Forex and author of the book “Making Sense of the Dollar,” noted in his blog post.
However, the US dollar may pick up a bid if the longer duration Treasury yields continue to track inflation expectations higher. The 10-year yield has gained close to 17 basis points in the past eight trading days.
Technical levels
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