Global stocks surged to fresh highs amid the persisting expectations of a strong economic recovery despite the ongoing pandemic
The dollar came under heavy selling pressure during the European hours on Monday as global stocks surged to fresh highs amid the persisting expectations of a strong economic recovery despite the ongoing pandemic. As such, the safe-haven demand for the greenback continues to ease, sending the USD index to five-week lows at the start of the week.
Against this backdrop, the EURUSD pair rallied to early-March highs in the 1.2030 area in recent trading. The technical picture has improved substantially following a break above the 1.2000 barrier that had been capping gains last week. Now, the pair needs to confirm the breakout on a daily closing basis in order to regain the 100-DMA that now represents the immediate upside barrier around 1.2050. The common currency also derived support from the reports that Pfizer and BioNTech said that the EU is exercising an option to secure additional 100 million doses from the pharma giants.
Meanwhile, GBPUSD surged to nearly two-week highs around 1.3890 amid broad-based weakness surrounding the greenback. The pair is now targeting the 1.3900 figure, a break above which would pave the way towards the 1.3920 next resistance. Earlier in the day, the cable attracted some dip-buying and turned positive for the sixth consecutive session.
The greenback will likely stay on the defensive these days, as investors seem convinced that the Federal Reserve will keep interest rates near zero levels for a longer period despite upbeat economic data out of the United States. Of note, the dollar failed to derive support from renewed fears about another wave of coronavirus infections worldwide that reduced investors’ appetite for riskier assets today. The USD index also feels the pressure amid the declining Treasury yields.