After having fallen sharply last week, the US dollar strengthened again in early trading due to investor fears of Covid-19 that could potentially damage the long-term economy. On Monday (30 / March), the movement of the greenback was observed to strengthen to cut losses that had been suffered versus major currencies last week.

The limited strengthening of the greenback earlier this week was caused by uncertainty due to the Covid-19 pandemic which is predicted to last long term, prompting investors to return to safe-haven assets. At the time of writing, the DXY Index, which measures the strength of the US dollar against six major currencies, is in the range of 98.67 or up 0.37 percent daily.

It should be noted that the performance of the greenback over the past week was quite bleak after noting a 3.76 percent decline reflecting profit-taking by investors considering the US dollar has rallied so impressively since the beginning of the month. Also, the weakening of the dollar over the past week was triggered by the move by the central bank to launch a liquidity policy amid the Coronavirus pandemic.

A similar opinion was expressed by one of the Standard Chartered analysts, "We see the strengthening of the dollar that occurred at the beginning of the week was more caused by risk aversion rather than differences in the benchmark interest rate".

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Interest Rate Cut and Prevention of COVID-19 by President Trump

President Trump on Sunday (29 / March) afternoon local time urged Congress to resume the full tax cut program for food and entertainment in response to the Corona Pandemic which is predicted to hit the country's economy this year.

In his latest statement, Trump also added that the steps to prevent the spread of Covid-19 were extended to April 30, while predicting the peak death rate caused by the Coronavirus will occur at least 2 weeks ahead.

It should be noted that the United States is now the epicenter of Covid-19 with the number of positive sufferers infected with the Coronavirus reaching 114 thousand people (data Sunday morning). Most of the spreads are centered in New York which has recorded 60 thousand people with victims reaching 1000 people.

The US Senate succeeded in agreeing to launch a fiscal stimulus budget of USD 2 trillion to overcome the economic slowdown due to the Coronavirus pandemic (COVID-19). The package is a supplement to the Fed's Quantitative Easing program which has been eagerly awaited by market participants.

Massive Budget Plans and Stimulus Strengthen Market Sentiment

The COVID-19 pandemic countermeasure budget plan was stalled for several days in the US Senate because the Democrats and Republicans had difficulty in agreeing on several crucial issues. However, after many days of negotiations, finally, a bipartisan agreement for the biggest stimulus in US economic history was reached.

"We have an agreement," Eric Ueland, director of legislative affairs at the White House. He added that the text of the legislation was not final, but "We either have an explicit legislative text and reflect all parties, or we know exactly where we will reach the legislative text as we proceed to the finals."

The prospect of massive stimulus from the United States government helped strengthen market sentiment in Asian markets, although the rally in high-risk currencies began to slow. The AUD / USD currency pair had climbed up to 0.6030, while NZD / USD was still at the level of 0.5872 when the news was written.

"This is a good rebound and we will probably defend it during the Asian session, but whether this mood can last 24 hours from now, I'm not sure," said Westpac forex analyst Sean Callow, as quoted by Reuters, "Overview (COVID-19 pandemic ) overall it's still very bleak and will almost certainly get worse."