EUR/USD is extending gains in early trading on Wednesday, maintaining a bullish stance for the sixth straight session. At the time of writing, one euro buys 1.2285 US dollars, up 0.30% as of 7:20 AM UTC. The pair updated the highest level in over two years.
The greenback has declined against majors as investors are focusing on risk assets amid hopes for global economic recovery in 2021 and another round of massive stimulus package in the US.
The USD Index, which tracks the US dollar against six other currencies, is down 0.23% to 89.713, the lowest in more than two years as well.
It’s worth mentioning that trading volumes are very low during the year-end holidays, which might exaggerate some market moves.
Yesterday, the US Senate delayed the vote on increasing the amount of direct payments to households from $600 to $2,000, as Majority Leader Mitch McConnell blocked the quick vote. Previously, the increase was approved by the House of Representatives at the proposal of incumbent President Donald Trump. The Senate will return to the stimulus checks later this week. So far, the US dollar has ignored McConnell’s decision, with investors focusing on the massive stimulus package worth $2.3 trillion signed by Trump, which is boosting investors’ risk appetite.
The US dollar is also under pressure amid fears that a new COVID strain could contribute to the resurgence of the pandemic and force another round of lockdown measures. The US reported the first cases of the new COVID variant, which is said to be 70% more infectious than the common coronavirus causing COVID-19. The UK was the first country to report the new strain, which has now been discovered in Colorado.
The news comes amid the start of the vaccination campaign in the US. However, critics say that it is already a failure, given that only 2 million Americans have taken one of the two approved vaccines, while a government program projected 20 million shots by the end of the year. So far, the US saw over 19 million infections and 337,000 deaths related to COVID, which are the highest figures in the world.