Recent price actions suggest the greenback pared losses that earlier occurred at the first trading session of the week after hitting multi-year lows against the British pound sterling and the Australian dollar.
Currency traders are definitely having a rough ride in 2021 with the world’s most powerful defying expectations in extending its anticipated decline — at least for now. At the time of writing this report, the U.S dollar index used to gauge the strength of the greenback against major global currencies that include the Euro, British pound sterling, Swedish Krona, Japanese yen was trading at 90.400 index points.
However, recent price actions anticipate more pullbacks in the coming hours, though it had earlier reversed two pullbacks in a row as the greenback continues to derive strength from higher U.S Treasury yields.
Currency traders are now focusing on the bigger picture at the world’s largest economy has all eyes will be on Federal Reserve Chairman Jerome Powell’s speech to Congress in the coming days. The leader of the U.S monetary policy team is expected to echo remarks that they remain resolute in using whatever monetary ammunition at their disposal in supporting the $2o trillion economies.
That being said, global investors will also look for any signal revealing whether the world’s most powerful central bank leader is troubled by steeper long-term borrowing costs after the real rates on long bonds rose above zero for the first time in 8 months
Forecasting the dollar’s direction becomes a tough bet to make as some currency traders are seeing a light at the end of the tunnel, but the tunnel looks more like an uneasy ride. Despite the significant success made since the outbreak of the COVID-19 concerns about new, potentially more tough COVID-19 variants persist.