Dollar index begins 2021 on a negative note

The US dollar remains on the offer on dovish Fed expectations.
Investors ignore weak China data, coronavirus concerns.

Omkar Godbole FXStreet Contributor

The dollar index, which gauges the greenback's value against majors, trades on the defensive on the first trading day of the new year, having declined by 6.83% in 2020.

Investors continue to offer the safe-haven greenback on expectations that the Federal Reserve would keep rates low for a prolonged period, shrugging off coronavirus concerns and weaker-than-expected China data.

As per The Japan Times, Prime Minister Yoshihide Suga is considering a new state of emergency declaration for Tokyo and three neighboring prefectures amid a surge in COVID-19 cases. The declaration could come this week. Meanwhile, the cases continue to rise in the US and across Europe. Further, China data released early Monday showed the pace of expansion in the manufacturing activity slowed slightly in December. So far, however, that has failed to put a bid under the greenback. At press time, DXY is hovering near 89.68, representing a 0.27% decline on the day.

Prominent investment banks such as Morgan Stanley, Goldman Sachs, and JP Morgan expect the greenback to depreciate by at least 5% this year.

"We remain upbeat on EUR/USD, EM FX and risk assets in general into the start of this year, and we don't really want to question this narrative until the recovery is strong enough for both fiscal and monetary administrations to consider removing the foot from the QE/stimulus-pedal," Nordea analysts said in their weekly note.

Meanwhile, Robin Brooks, Chief Economist at the Institute of International Finance, foresees a 2013-like taper tantrum once major economies begin mass coronavirus vaccinations. In that case, the safe-haven dollar could find bids.

Technical levels

Dollar Index Spot

Overview
Today last price	89.68
Today Daily Change	-0.25
Today Daily Change %	-0.27
Today daily open	89.94

Trends
Daily SMA20	90.37
Daily SMA50	91.66
Daily SMA100	92.46
Daily SMA200	95

Levels
Previous Daily High	89.94
Previous Daily Low	89.94
Previous Weekly High	90.38
Previous Weekly Low	89.52
Previous Monthly High	92.02
Previous Monthly Low	89.52
Daily Fibonacci 38.2%	89.94
Daily Fibonacci 61.8%	89.94
Daily Pivot Point S1	89.94
Daily Pivot Point S2	89.94
Daily Pivot Point S3	89.94
Daily Pivot Point R1	89.94
Daily Pivot Point R2	89.94
Daily Pivot Point R3	89.94

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD climbs to two-week highs beyond 1.1900

EUR/USD is keeping its foot on the gas at the start of the week, reclaiming the 1.1900 barrier and above on Monday. The US Dollar remains on the back foot, with traders reluctant to step in ahead of Wednesday’s key January jobs report, allowing the pair to extend its upward grind for now.

GBP/USD hits three-day peaks, targets 1.3700

GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.

Gold treads water around $5,000

Gold is trading in an inconclusive fashion around the key $5,000 mark on Monday week. Support is coming from fresh signs of further buying from the PBoC, while expectations that the Fed could turn more dovish, alongside concerns over its independence, keep the demand for the precious metal running.

Crypto Today: Bitcoin steadies around $70,000, Ethereum and XRP remain under pressure

Bitcoin hovers around $70,000, up near 15% from last week's low of $60,000 despite low retail demand. Ethereum delicately holds $2,000 support as weak technicals weigh amid declining futures Open Interest. XRP seeks support above $1.40 after facing rejection at $1.54 during the previous week's sharp rebound.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.

Ripple exposed to volatility amid low retail interest, modest fund inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.