The US stock market closed Thursday's trading at historic highs, noting a strong growth upon US President Joe Biden's signing of the $1.9 trillion fiscal stimulus package.
However, on Friday, futures for US stock indices went down.
Apparently, there is a traditional "selling the fact" after "buying the rumor".
A similar picture is observed in the foreign exchange market.
The EUR/USD pair fell by more than 0.6%, to 1.1910 after reaching weekly highs around 1.1990 the day before.
At the same time, the USD index rose almost 0.5%, rebounding from its lowest levels since March 4.
The greenback attracted buyers near 91.36 points. If its growth gains momentum, the USD index may aim for the current year's highs near 92.50 and then at 92.80 (the level where the 200-day moving average passes).
The dollar is strengthening primarily due to the recovery in the 10-year Treasury yields, which rose above 1.61%.
With the new fiscal stimulus package, the US economic outlook promises to get even brighter, providing an additional boost to long-term bond yields.
Another driver of the USD growth was the speech of US President Joe Biden to the nation immediately after the signing of the $1.9-trillion aid package. Biden stressed that all Americans will be able to get the COVID-19 vaccine in early May, which is somewhat ahead of schedule.
The greenback was also supported by reports of increased tensions between Washington and Beijing after the US announced new restrictions on individual companies supplying parts to Chinese tech giant Huawei.
Meanwhile, news that several European countries including Italy, Denmark, Norway, and Iceland have suspended the use of the coronavirus vaccine from AstraZeneca amid blood clot cases, put pressure on the euro.
"Potentially, this could lead to the fact that the timing of the recovery of the eurozone economy will be revised, which will contrast with the United States, which is also the reason for the cautious attitude of investors towards the single currency," said MUFG experts.
"The European economy may remain under pressure even in the second half of the year, while the US economy will surpass it thanks to a faster start of mass vaccinations and effective containment of the coronavirus. Such a lag in the eurozone in terms of vaccination and economic recovery may adversely affect EUR/USD, which may sink to the lower end of the 1.1700-1.2200 range in March," Westpac strategists said.
On Friday, traders continued to win back the results of the ECB's March meeting, which took place the day before.
The regulator kept interest rates unchanged but announced its intention to significantly increase the pace of asset repurchases in the next quarter.
This is negative news for the euro, as the ECB reacted very quickly to the growth of bond yields in the EU.
Market participants are now waiting for similar steps from the Fed, considering this the most logical development.
The Fed's response will not have to wait long. The next FOMC meeting will be held next week and could be a turning point for the markets.
If the US Central Bank announces an expansion of QE, it will become a catalyst for the growth of stock indexes and cause a new round of weakening of the dollar. Otherwise, risky assets will be under increased pressure, and the greenback will gain fundamental ground for growth.