Dollar retreats from four-month highs as market recovers risk appetite

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The U.S. dollar pulls back from a four-month high against the Euro as appetite for risk currencies improved after the weeklong rally when investors feared the virus outbreak.

Nasdaq and S&P 500 indexes gained new highs as a top Chinese health adviser said that the outbreak might be peaking.

The coronavirus spread in China could be over in April said the country’s senior medical adviser. The World Health Organization recently said that the virus posed a global threat worse than terrorism as the death toll passed 1,000.

Virus worries caused the dollar to gain in a weeklong rally. Economic data showed that the US has stronger outlook compared to European countries.

Investors sought out carry trades as the market showed low volatility, causing the dollar consistent gains. Traders chose to borrow in low-yielding currencies and invest in high-yielding currencies like the dollar.

The euro slipped $1.0892 on Tuesday, before recovering back to $1.0923.

Jerome Powell, Chairman of the Federal Reserve said that the US’ economic outlook was good despite the potential threat of the virus on the economy.

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