During the first couple of days of the new year, the US dollar continues the downward trend recorded in 2020. It is declining again against the rest, with difficulty maintaining its current positions.
Today (January 4), the EUR/USD pair was trading in the range of 1.2294-1.2295. It consolidated near the level of 1.2300 at the start of trading week to strengthen its position. After that, experts emphasized that the euro rose by 0.3%. The strong demand for risky assets contributes to its strengthening.
At the same time, experts have recorded a 0.3% drop in the WSJ Dollar Index. The negative mood caused by the US dollar's decline is complemented by the loss of the BBDXY, which reflects the USD dynamics against ten key currencies. Last year, it declined by 5.5%, falling to record levels over the past three years. According to analysts, the US dollar showed the worst dynamics during the first and final years of the administration of US President Donald Trump.
It should be noted that the US dollar steadily rose from January to February 2020. Moreover, the BBDXY index soared to its peak in March 2020 amid the economic shock due to COVID-19. However, this optimism ended the next month, which was followed by the beginning of a recession. The Fed took charge of the situation, turning on the printing press to save the economy. In view of this, the BBDXY has been declining for eight months, ending 2020 disappointingly.
The US dollar also started the new year with a downward trend, leaving no hope for further growth. Analysts say that the USD fell against most global currencies at the start of the current week. They believe that this is due to traders' increased optimism about the prospects for a global economic recovery, who expect another round of economic growth in 2021. However, experts emphasized that the positive mood provoked a downward trend in the US dollar.