Currency Traders Short U.S Dollar amid Growing Appetite for Risk

This led the U.S dollar index value to lose about 0.35% at the time of writing this report.

The bearish bias is coming on the massive stimulus deal recently passed by the leader of the world’s most powerful economy.

In addition recent price action, in the currency market reveal U.S dollar bears are cruising high on a report that hint more COVID-19 vaccines are on their way, thereby brightening the global economy outlook for 2020, thereby triggering global investors in liquidating their dollar holdings into assets like Stocks, Crypto and other riskier financial instruments. This alone suggests many to cautiously trade US dollars, against many growth currencies.

The US dollar weakness also has been strengthened of late on the bias that the unprecedented level of quantitative easing programs of the U.S central bank is seen by many economic experts as inflationary in principle, leading many to believe that the continual plunge in the U.S dollar value might persist into 2021 unless there is a surprise pivot by the U.S Federal Reserve board.

Ahead of its prevailing index point the U.S dollar index support line or previous resistance stands around 89.70, its monthly low, and around the lowest level since mid-2018, of 89.73, which could aid USD bulls from suffering less damage, taking into consideration currency traders might likely go long at those levels, except more liquidity injections such as an upgrade in more COVID-19 stimulus spending programs are approved.

Traders are of the opinion that it’s still too early to worry when the central bank pushes back against the dollar down cycle.