The new trading week began with the US dollar reaching a three-month high on the wave of the US Senate's approval of a $1.9 trillion stimulus package.
Today, the US dollar strengthened against other global leading currencies. This was mainly due to the positive US labor market report, published last Friday (March 5). Many investors and traders started buying USD even before the publication of payrolls, which provoked a rally in the latter.
It should be noted that the recovery of the US labor market strengthened the optimism of Fed Chairman, Jerome Powell, as well as contributed to the growth of the US dollar. On Monday, the EUR/USD pair was trading near the range of 1.1872-1.1873, slightly losing its positions. The Euro currency was the most affected in the pair. Last Friday, the EUR/USD pair was among the outsiders. Experts are worried that the catalyst for euro's further decline will be the "dovish" rhetoric of the ECB. If so, analysts believe that the EUR/USD pair will decline to the 200-day moving average, that is, to the level of 1.1800.
This week's key supporting factor for the USD is the progress in the approval of $ 1.9 trillion stimulus package. It should be recalled that the US Senate adopted the anti-crisis plan of US President Joe Biden after the positive labor market report was published. So, the current US employment statistics helped the dollar to rise to its highest level since November 2020.
On this positive wave, traders and investors highly assume that the US economy will recover early this year, which further supports the US currency. The only concern of market participants is the possible sharp inflation growth, which contributes to the growth of US government bond yields. At the same time, Central banks representatives assure that the stimulation of the current monetary policy will continue.
Over the next few days, the focus of the market will be on the decision of ECB and the Bank of Canada relative to monetary policy. Investors and traders do not expect the parameters of the current monetary policy to be tightened, although this option can be considered in the near future. At the same time, experts stressed that the dollar bears are not in a rush to increase rates against the US dollar.
