The U.S. dollar was struggling to gain ground on April 21, hovering just above a seven-week low with the subdued U.S. bond yields reducing the currency’s yield appeal. The world’s reserve currency got some rest from a pullback in world stocks from record highs as the rise of coronavirus cases in many countries soured the outlook for a quick global recovery.
The safety bid also helped to boost the yen. Japan’s currency climbed to a fresh seven-week peak of 107.88 per dollar on Wednesday. It could strengthen to 105 per dollar in the near term. The yen was as week as 110.97 for the first time in a year at the end of March.
The benchmark 10-year Treasury yield was about 1.56%, not far from its worst result since mid-March. It continued to consolidate after its retreat from the 14-month high at 1.7760% reached at the end of March. As the U.S. Treasury yields have started to come off, people are unwinding yen short positions.
Interestingly, the dollar index was at 91.254 in Asia after declining to as low as 90.856 on Tuesday. The index that tracks the U.S. currency against six main peers fell to 90.856 for the first time since March 3. It declined 2.1% so far in April. The index mentioned above dropped below its key short-term support level and can see further downside to the low 90s, with the euro rising to around $1.22.
The euro traded at $1.20275 after reaching a seven-week high of $1.2079 overnight. The European Union made an important announcement and this announcement helped to boost the euro. The EU secured an additional 100 million doses of the COVID-19 vaccine produced by BioNTech and Pfizer.
Dollar vs. other currencies
In April, several central banks, including the Federal Reserve, will have to make a decision regarding their policies. The European Central Bank will make this decision on Thursday.
Declines in the U.S. yields, and the greenback in April, have come as evidence that the Fed would be slower in tightening monetary policy than it appeared to the market.
The Canadian dollar traded at C$1.26110 to the greenback in Asia after its worst decline in nearly two months. The country’s central bank is due to announce the decision regarding its policy on Wednesday.
The Australian dollar is a barometer for risk appetite, and it dropped 0.2% to $0.77057 after sliding 0.4% overnight.
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