USD Forex Market Weakness Continues Amid Stimulus Check Arguments

• Dollar Index Near Multi-Year Low
• Senate Wrangles on Stimulus Check Increase
• Markets Head Stable into 2021

In a shortened trading week for the forex market as we approach 2021 the US Dollar showed no signs of strengthening as it continued weaker to below 90. This marks a continual decline in the index reaching its lowest mark since early 2018. Meanwhile, the US Senate had a busy day of disagreement on Tuesday as they look to pass through a bill to increase the size of the stimulus check from $600 to $2,000 per person. Major markets remained largely unaffected as they seek to finish 2020 off in high style.

Dollar Index Continues to Drop

While a weaker Dollar is often welcomed by many in trading as an indication of a more risk-on approach, even those in forex trading are beginning to notice the continual slip of the Greenback. This has been most pronounced since May when the index that represents the strength of the Dollar against other major currencies in the world stood at just over 100.

The global battle and recovery against COVID-19 spiked a wave of more positive sentiment as economies around the globe tries to get back on their feet much through government fiscal support measures. This moves many away from the traditional safe haven USD though the fact that other safe haven assets like Gold remain very highly priced may be further indication there is a lack of trust in the Dollar at least at the moment.

Complications Continue with Relief Checks

Democratic leaders failed on Tuesday to push through a unanimous bill that would increase the size of the latest Coronavirus stimulus checks approved in the recent relief deal. The bill would bump the checks up from $600 to $2,000 in a move that was preempted by outgoing President Trump.

The move was blocked though by Republican majority leader Mitch McConnell who swiftly proposed his own bill that would also increase the size of the payments but with a number of add-ons unlikely to be acceptable to the Democrats in the Senate. Such “loading up” of legislation has now become standard practice and greatly muddies the waters. This level of uncertainty may be another key reason why forex brokers continue to see moves away from the once steadfast US Dollar when it comes to a trusted safe haven.

Wall Street Looks to End 2020 on a High

Despite the political disagreements and even an uptick in cases of the new COVID-19 variant around the world that has now reached the US with one case, markets are trying to end the year by carrying on their recent bullish form.

After powering into the Christmas period the Dow Jones, S&P 500, and NASDAQ all closed slightly lower on Tuesday. After the bell though there were more signs of steady trading that are certain to be further boosted if the political leaders can get an increased stimulus check over the line.