Dollar Index: Sidelined near 90.40, BoFA foresees USD strength
- The dollar index trades flat in Asia, having established support at 90.25 on Thursday.
- Fiscals stimulus and faster vaccine delivery could propel the USD higher, BoFA analysts say.
The dollar index, which tracks the greenback's value against major currencies, is trading in a sideways manner above 90.45 at press time, having defended the area around 90.25 for the second consecutive day on Thursday.
Bank of America (BoFA) Global Research's economists expect the dollar to benefit from the impending US economic decoupling from the Eurozone.
"The key reasons for this US decoupling from the Eurozone include more US fiscal stimulus and slow EU vaccination," economists said, adding that an extreme decoupling could pave the way for dollar strength.
According to AP News, the US is on track to exceed President Joe Biden's goal of administering 100 million vaccine doses in the first 100 days of the new administration, with more than 26 million shots delivered in his first three weeks.
President Biden said Thursday that the US has secured contractual commitments from Moderna and Pfizer to deliver the 600 million doses of vaccine by the end of July.
BoFA expects the US economy to expand 6% this year and 4.5% next year, compared with consensus forecasts of 4.1% and 3.5%, respectively.
While most observers, including BoFA's economists, say risks for the dollar are skewed to the downside in the near-term, HSBC suggests otherwise.
According to bank's analysts, the record low two-year yield weakens the case for a strong dollar. The two-year yield hit a record low below 0.1% earlier this week.
Technical levels