Investors Tempering their Bearish Bets on U.S Dollar

At press time, the U.S. Dollar Index that gauges the greenback against a basket of major global currencies rallied by over 0.30%, minting impressive gains and thus climbing above the 90 price level, on the U.S dollar index.

Almost all assets including Bitcoin, Gold, Crude oil, and global stocks dropped significantly at the time of drafting this report, as It appears this time currency traders and global investors are struggling to iron out if the triggered nominal rise sighted on U.S Treasury yields could be a pre-cursor to a change in America’s monetary policy, which is the primary indicator for determining the direction of the US dollar from a monetary perspective.

Right now, FX dollar bears hold on the safe-haven market is virtually fizzling out, on the account that higher U.S Treasury yield differentials are giving dollar bulls enough gas to stay above the 90 index point level amid growing sentiments that the world’s largest economy will recover quicker than Europe in particular as the incoming American president aggressively pushes for more COVID-19 vaccination efforts.

On the greenback’s activity in the near term, it might be a case of a significant amount of volatility coming to play on the bias that whenever the risk-on sentiment like global stocks raises, the greenback relatively turns negative as capital is allocated elsewhere, meaning it’s not clear yet, if the U.S dollar recent bullish run can be sustained.

However, some leading currency experts anticipate the broad US dollar momentum will likely extend in the coming days even though it seems riskier assets like stocks and crypto are attracting record inflows of funds but there is also a growing reluctance to sell the greenback arbitrarily with the reckless upsurge in COVID-19 caseloads globally.