The U.S dollar has so far managed to remain strong and has continued to rise even though investors have been losing their risk appetite due to the effect of coronavirus on the markets.
The dollar’s upside momentum is evident in the performance of the U.S dollar index, which keeps track of the dollar’s performance against a group of other major currencies. The dollar has been taking a hit lately due to various economic factors, including the impact of the coronavirus on trade and also on the market performance in the U.S. Its previous losses were also fueled by the rebound in risky assets that was experienced last week.
The dollar index has, however, kicked off this week on a bullish performance, indicating that the greenback’s against the basket of other currencies is improving. It has been on the rise, especially because investors have been using the dollar as a safe-haven currency since most of the other global currencies have been losing value as the number of coronavirus deaths across the globe continues to rise.
From the dollar index chart above, we can see that it kicked off Monday’s trading session from a low of 98.31. The price has overall been bullish, and it peaked at 98.99 at the time of this press. National Australia Bank senior forex analyst, Rodrigo Catril, highlighted that the U.S dollar’s upward momentum reflects the cautious outlook by investors, thus their decision to use the dollar as a safe-haven currency.
Will the dollar maintain the bullish momentum?
At the moment, there is too much uncertainty in the market and a slew of changing variables that have varying degrees of impact on the markets. For example, negative economic data may influence a decline in the dollar’s performance while the Federal Reserve’s economic policy adjustments and economic support measures may act as a safety net in these trying times. It is thus difficult to predict the outlook, especially since the coronavirus threat remains active.