SYDNEY- The US dollar was trying to keep a rare rally together on Monday as its longest losing streak in a decade left much of the market structurally short of the currency and vulnerable to a squeeze on any upbeat news.
Bears were caught out by a better payrolls report, which pushed Treasury yields higher into this week’s massive $112 billion debt sale. Yet the dollar still ended lower for the seventh week in a row.
“Our portfolio has been positioned for a number of weeks now for a narrowly weaker USD as a consequence of the independent surge in COVID-19 infections in the US that has opened up a decent gap in near-term economic performance, especially against Europe,” said analysts at JPMorgan in a note.
“Our positions have been concentrated in the EUR-bloc, reflecting also the structural improvement in the European policy framework following the agreement over the recovery fund.”
The euro held at $1.773 on Monday, having hit a two-year high of $1.1915 last week, which now acts as major resistance. Support comes in around $1.1755 and $1.1694.
Turnover was light with Tokyo on a holiday and considerable uncertainty on whether US policymakers can agree a new package of fiscal support for the virus-hit economy.