Dollar slides to two-week low on improved risk sentiment

The US dollar extends weakness against the basket of its major counterparts into fourth consecutive day, dragged down by improving risk sentiment on growing optimism over monetary and fiscal support, robust corporate earnings and expected recovery from Covid-19 pandemic.

Strong rise of Bitcoin after Tesla disclosed a $1.5 billion investment into leading cryptocurrency that lifted the price to the new high above $48,000, added to fresh risk appetite

After a strong start of the year, the greenback, traditionally viewed as safe haven, was hurt by disappointing US jobs data for January which raised concerns about the pace of US economic recovery and provided turning point for the currency.

The dollar index fell to the lowest in two weeks and pressures psychological $90 support, break of which would risk deeper fall and test of 2021 low at $89.15, posted in early January.

Investors remain divided over the impact on the dollar of President Joe Biden’s planned $1.9 trillion fiscal stimulus package, as on one hand, it is expected to accelerate a US recovery relative to the other countries and boost the greenback, but on the other, it is a major driver in a global deflation narrative that should lift riskier assets and deflate dollar.