The dollar is gaining ground to other major currencies during early Monday trading, as the risk-on sentiment that has dominated the markets recently appears to be receding. To a large extent, the greenback’s losses over the last few months are a reflection of investors’ faith in the continuation of the Fed’s dovish monetary policies for the foreseeable future. However, as the markets digest the recent political developments in Washington, with the Democrats now controlling the Presidency, Senate and Congress, the probability of extensive fiscal stimulus being deployed has grown, which in turn increases the likelihood of a change in stance from the Federal Reserve and an anticipated end to the very low interest rates.
The week has started with some recovery signals from the greenback, while stock markets are taking a small pause after the recent rallies. The main scenario remains positive (we could say “risk on”), but we are seeing some investors taking profit. All this is reflected on the prices of gold and oil. While the oil price started the new week with a moderate decline, with both Brent and WTI in red, this tiny fall is not impacting the main trend so far, which remains supportive to oil’s continued recovery.
We should note that gold is in green after last week’s significant decline. This comes despite the recovery signals coming from the US dollar. Bullion seems to have built a solid support base at $1,830 and the price looks well placed to rebound. If the recovery continues, there is space for a swift gain to challenge a potential target between $1,880 and $1,900.
Independent writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.