BREAKING: Dollar Up, But Bets on Further Declines Continue

Photo: Reuters

Investing.com – The dollar was up on Friday morning in Asia, with investors continuing to bet on further declines as optimism that the COVID-19 pandemic is slowly starting to come to an end.

The euro, on the other hand, benefitted from the dollar’s weakness and looked set to close its best week in a month.

The U.S Dollar Index that tracks the greenback against a basket of other currencies inched up 0.03% to 90.688 by 9:38 PM ET (1:38 AM GMT).

The index has slid around 12% from a three-year high of 102.990 in March to a two-and-a-half year low of 90.504 seen on Thursday.

Investors have a heavily short dollar stance recently, over bets that rates in the U.S. will stay low for a long time and being forcing yield-seekers to search for better returns elsewhere.

A $908 billion COVID-19 aid package was gaining traction in Congress on Thursday, and the Federal Reserve (Fed) is widely expected to expand its bond buying program.

Both would see the dollar continue its downward trend, with bond buying keeping yields anchored and spending increasing appetite for riskier currencies. Both the Fed and European Central Bank (ECB) will convene for their respective policy meetings during the following week.

The USD/JPY pair inched down 0.02% to 103.81.

The euro was also headed for its best week in six months against the yen, but the yen rose a little against the weakened dollar during the previous session.

The AUD/USD pair edged down 0.13% to 0.7428 and the NZD/USD pair edged down 0.16% to 0.7062.

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