US Dollars Falls Against Several Currencies

Forex News Roundup: US Dollars Falls Against Several Currencies, Remains Under Pressure

Currency Converter Calculator's Forex News Roundups aim to help FX traders and enthusiasts stay abreast of all the latest developments in the market, focusing on major currency pairs. In this edition, we review the US Dollar's (USD) continued weakness and explore the factors that will determine its strength over the coming months. 

USD Falls Against EUR and CAD

The Greenback has endured a bad start to the week, falling against many of its currency rivals. For example, it fell to a new multi-month low against the Canadian Dollar (CAD), hitting 1.3150 as demand shifted away from the safe-haven asset due to many stock markets posting impressive gains. 

Meanwhile, the Euro (EUR) has appreciated the Dollar, climbing to the mid-1.1800s to recover some of the losses it incurred towards the previous week. 

Aside from the more optimistic economic outlook in Europe, the Greenback has been facing selling pressure due to US lawmakers struggling to find common ground and agree details of a financial stimulus package to kickstart the economy as it looks to mount a quick recovery after COVID-19. 

Progress in several different countries towards developing a coronavirus vaccine is also hurting the USD. It tends to perform well during times of uncertainty and economic difficulty, as it is considered the safe-haven asset of choice for most institutional and private investors around the world. 

Derek Halpenny, head of research at MUFG, said: "I think the markets are still relatively positioned for a vaccine being done and dusted by year-end and gradually rolled out in the first half of 2021. I think it would take a lot for the markets to price in something more rapid than that."

Is the Greenback Still a Safe Haven Investment?

Throughout the majority of the COVID-19 pandemic, the US Dollar has acted as a safe-haven investment, with investors flocking to the Greenback whenever the pandemic took a turn for the worse or whenever the global economic situation or outlook deteriorated. 

However, last month, the USD seemingly stopped being the preferred safe-haven investment, with gold dethroning. This left the Dollar vulnerable to the very events which it previously strengthened as a result of.

But, the good news now is the Greenback has retaken its status as the safe-haven investment of choice, as exhibited by the aforementioned price movements on Monday against the Canadian Dollar and the Euro. 

According to analysts, this comes as gold's impressive bull run has come to an end, though the precious metal could pick up where it left off over the coming weeks. 

A Quick Summary

• The US Dollar has had a poor start to this week, with it falling against a number of its main currency rivals.
• Specifically, it hit a new multi-month low against the Canadian Dollar and lost most of the ground it gained last week against the Euro.
• The Dollar suffered these setbacks due to the more optimistic economic outlook in Europe and Asia, which prompted riskier currencies and stocks to appreciate.
• Progress made towards developing a COVID-19 vaccine is also hurting the USD, as it's a safe haven asset and therefore sees a fall in demand when investors are less scared and worried about the global economic outlook. 
• US lawmakers' inability to a agree and pass through a financial stimulus package to help the economy recover from COVID-19 is also dragging on the value of the Greenback.