The dollar is on track for the biggest weekly advance in six months
The US dollar regained traction on Friday, remaining on track for its best week since early April despite Thursday’s pause.
The Dollar Index, which measures the performance of the dollar against the basket of six major world currencies, rose to a two-month high this week, signaling a correction of the March/August 10.3% fall.
Fresh risk aversion in the market – sparked by a darkened outlook for global economic recovery amid a second wave of Coronavirus, and weaker than expected economic data – prompted investors from riskier currencies into the safe-haven greenback.
The dollar is also heading for its best monthly performance in more than a year, as rising demand for safety counters weakening conditions in the US retail and labour sectors, as well as stubbornly low inflation that has pressured the US central bank to keep ultra-low interest rates for an extended period of time.
The dollar index cracked important technical resistance (Fibonacci 23.6% retracement of March/August 103.80/91.71 fall), with a firm break here confirming a bullish structure and signaling a further advance.