The U.S. dollar dropped against its major trading partners in the European session on Monday, after the Federal Reserve pledged to purchase an unlimited amount of Treasurys and mortgage-backed securities to support the economy from impact of the coronavirus pandemic.
Citing the tremendous hardship being caused by the outbreak, the Fed said it is committed to using its full range of tools to support households, businesses, and the U.S. economy.
The central bank said it will buy bonds “in the amounts needed to support smooth market functioning and effective transmission of monetary policy.”
The Fed had previously announced it would purchase at least $500 billion of Treasury securities and at least $200 billion of mortgage-backed securities.
The US central bank also announced three new credit facilities and an upcoming Main Street lending program that would provide up to $300 billion in funds.
The currency has already been under pressure as U.S. massive stimulus plan was deadlocked in the Senate.
Senate Democrats late Sunday blocked the passage of a third economic stimulus package to combat the impact of coronavirus.
Voting largely along party lines, the Senators voted 47 to 47 on the procedural motion, falling short of the 60 votes needed to advance the bill.
The greenback was trading at 0.9806 against the franc, down from a high of 0.9900 set at 6:30 am ET. The greenback may locate support around the 0.97 level.
The greenback declined to 1.0806 against the euro from Friday’s closing value of 1.0698. The greenback is poised to challenge support around the 1.10 level.
The greenback pulled back to 1.1675 against the pound, from a high of 1.1506 seen at 7:30 am ET. The greenback is seen finding support around the 1.22 mark.
Survey results from IHS Markit showed that UK households’ perception about financial well being deteriorated in March to its lowest level since mid-2019.
The household finance index fell sharply to 42.5 in March from 47.6 in February. This was the lowest since May 2019, contrasting with February’s survey high.
The greenback eased to 0.5845 against the aussie, 1.4336 against the loonie and 0.5738 against the kiwi, from its early highs of 0.5700 and 1.4491 and a 4-day high of 0.5586, respectively. If the greenback falls further, it is likely to test support around 0.64 against the aussie, 1.33 against the loonie and 0.68 against the kiwi.
The greenback fell back to 109.82 against the yen, from a high of 111.25 hit at 6:30 pm ET. Further decline in the currency is likely to see support around the 108.00 level.
Looking ahead, Eurozone flash consumer sentiment index for March is set for release at 11:00 am ET.
The material has been provided by InstaForex Company – www.instaforex.com