FX.co ★ US dollar is expected to revive in 2021, like a legendary Phoenix

Experts are trying to predict the further dynamics of the US dollar, apart from the statement of its total collapse. In 2021, the indicated currency is expected not only to continue declining, but also to begin reviving just like a legendary Phoenix.

The new year started with another failure for the dollar, since expectations of a global economic recovery contributed to an increase in demand for risky assets. On January 4, it lost its position against most major currencies. Experts say that this caused its index to drop to an extremely low level over the past three years.

Today (January 5), the EUR/USD pair was trading near the range of 1.2264-1.2265, trying to further rise. According to analysts, the Euro rose by 0.7% a day earlier amid a weakening US dollar. They noticed that investors' mood improved amid the spread of vaccines against COVID-19 and increased economic activity.

Most analysts believe that the current situation is not conducive to buy the US currency. It can be recalled that it showed the most impressive annual drop last year, which has not been recorded since 2017. The Bloomberg Dollar Index also plunged by 0.5%, the lowest in the last two years. In 2020, this indicator declined by 5.5%. Based on the information provided by the Commodity Futures Trading Commission, the volume of speculative positions to sell USD reached the highest in the last ten years before 2020 ended.

Experts drew attention to the activation of the dollar index in the last decade of December 2020. A parting gift to the outgoing difficult year was the growth of this indicator, which gave hope to the market. Such a reversal in the US dollar's dynamics coincided with the rising tension of the epidemiological situation, namely the emergence of a new strain of coronavirus in the UK. Analysts do not exclude that the current situation may push investors to build up protective assets in their portfolios. If this scenario works out, the USD index will increase again. Therefore, we can expect the US dollar to revive and surprise the market at the start of 2021, just like a Phoenix bird.

In the next few months, the dollar's dynamics will depend on the situation of the economy and world stock markets. Important factors for the USD are still the epidemiological situation associated with COVID-19, and the geopolitical strategy in the United States, which will be adhered to by the new US President, Mr. Joe Biden.

The US currency is expected to rise in the long term planning range, as the US economy also has the properties of a Phoenix bird and is able to recover in a short time compared to other global economies.