U.S. Dollar Lower Amid Recovery Hopes
The U.S. dollar came under pressure against its most major
counterparts in the European session on Tuesday, as investors hope
that a successful vaccine rollout and prospects of the U.S. fiscal
stimulus could spur the economic recovery.
Expectations of the U.S. fiscal stimulus continued to support
reflation trades, driving investments into riskier assets.
U.S. Treasury yields have risen to their highest levels since
March amid a sell-off in bonds.
The minutes from the U.S. Federal Reserve's January meeting will
be published on Wednesday. It may offer clues about the discussions
regarding the tapering of the asset purchase programme among Fed
Last week, Fed Chair Jerome Powell committed to maintain an
accommodative monetary policy to attain employment goal.
The greenback dropped to 1.2170 against the euro, its weakest
level since January 27. The greenback is likely to find support
around the 1.24 region, if it falls again.
The flash estimate from Eurostat showed that the euro area
economy contracted at a slightly slower than initially estimated
pace in the fourth quarter amid Covid-19 control measures.
Gross domestic product declined 0.6 percent sequentially instead
of 0.7 percent estimated previously. The fall reversed a record
12.4 percent rebound seen in the third quarter.
The greenback reached as low as 0.8871 against the franc,
setting nearly a 3-week low. Next key support for the greenback is
likely seen around the 0.86 level.
The greenback eased off from an 8-day high of 105.63 versus the
yen, touching 105.18. The next possible support for the greenback
is seen around the 104.00 level.
The greenback declined to near a 4-week low of 1.2610 against
the loonie, compared to Monday's close of 1.2633. The greenback is
poised to find support around the 1.24 level.
In contrast, the greenback recovered to 0.7776 against the
aussie and 0.7235 versus the kiwi, from its early near a 5-week low
of 0.7805 and near a 6-week low of 0.7268, respectively. On the
upside, 0.76 and 0.70 are possibly seen as the next resistance
levels for the greenback against the aussie and the kiwi,
The U.S. currency bounced off from near a 3-year low of 1.3952
versus the pound, with the pair trading at 1.3905. The greenback is
seen finding resistance around the 1.37 level.
New York Fed's empire manufacturing survey for February is due
out in the New York session.