US dollar index in recovery mode as Treasury nominee Janet Yellen set to declare commitment to market-determined dollar

By: Michael Harris
Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to… read more.
on Jan 19, 2021
  • Janet Yellen is set to declare the country’s commitment to market-determined dollar value
  • Yellen is set to testify on Capitol Hill on Tuesday and is expected to become the new Treasury Secretary
  • The first two weeks of January saw a recovery in price action to push the dollar index above the $90.00 mark

Treasury pick and the former Fed chief Janet Yellen is due to testify on Capitol Hill today. She is expected to reaffirm that the Biden-led US administration won’t pursue a path of weaker dollar.

Fundamental analysis: Change in policy compared to Trump

Janet Yellen, U.S. Treasury nominee picked by U.S. president-elect Joe Biden, is set to declare the country’s commitment to market-determined dollar value and pledge that the U.S. does not seek a weaker dollar, according to a report by the Wall Street Journal reported.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

Yellen is set to testify on Capitol Hill on Tuesday and is expected to become the new Treasury Secretary. 

If the committee asks her about the exchange rates policy, Yellen is expected to say that the value of the United States dollar  “and other currencies should be determined by markets. Markets adjust to reflect variations in economic performance and generally facilitate adjustments in the global economy,” according to the WSJ report. 

“The United States doesn’t seek a weaker currency to gain competitive advantage,” Yellen is prepared to state, said the report citing Biden’s officials. “We should oppose attempts by other countries to do so.”

Technical analysis: Dollar recovers ahead of Yellen testimony

The U.S. dollar index has continued its recovery after falling to a two and a half year low in December. The first two week of January saw a recovery in price action to push the dollar index (DXY) above the $90.00 mark. 

Dollar index (DXY) weekly chart

However, today’s move to nearly $91.00 has resulted in a rotation lower with the DXY price now trading below the $90.50 mark once again. For the dollar to recover in a stronger fashion, the buyers would need a push above the key bull/bear line at near $92.00.

Here is our 2021 outlook for the dollar index

Summary

Janet Yellen, who is expected to become the new Treasury secretary under Joe Biden’s administration, is set to announce the country’s commitment to market-determined dollar value and say that the government does not seek a weaker dollar.

Where to buy right now

To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:

  1. Etoro, trusted by over 13m users worldwide. Register here >
  2. Capital.com, simple, easy to use and regulated. Register here >