The USD index looks technically and monetarily destined to test 2018's important 88.25 low, even if there will be some stops and starts along the way.
Today’s recovery, caused by EUR/USD's failed attempt to clear its 1.2177 trend high and as pandemic lockdowns nS8N2IO06RnS8N2IO06N in the UK and continental Europe nL8N2IU3O7 took GBP/USD well off its highs, is an example of this.
Indeed, earlier today, the dollar index hit its lowest level since April 2018 amid renewed reflation trade flows that leaned on the now low-yielding dollar and Fed largesse for funding.
But those dollar-bearish flows reversed as actual, not hoped for, Brexit nL8N2IU12T and U.S. pandemic relief bill nL1N2IR2H1 deals are awaited, and as the cost of COVID-19 containment continues to rise.
The distribution of vaccines in the UK and the US looks like the beginning of the end of the pandemic.
However, getting through the winter will remain a major challenge nW1N2HV01Z.
The Fed, on Wednesday, will maintain its full accommodation posture, but it might have to spring into action if a relief bill comes too late, or with too little support, or not at all.
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