The New Year was greeted optimistically by various parties. However, what about the condition of the world currency? The dollar starts 2021 with bearish pressure. This is a condition in which investors are betting that the global economic recovery will divert money into risky assets 

The situation is expected to continue even as the U.S. twin deficits are wide open as it debates which currency will be cheaper later. For information, the Euro drove to the figure of $ 1.2281. That is quite a good rise in the market.

The increase was the highest since April 2018. This year, the Euro has undergone a rise of almost 10%. The next stops were at $1.2413 and $1.2476. The increase was as if on its way to a peak like in 2018 at $1.2555.

The Dollar Is Falling

The USD as one of the major currencies also fell to 103.07 yen. However, it remained near its December low of 102.86. Different things happen to other money, namely Pound Sterling. Sterling reportedly surged and had a pretty good rise.

The situation came as MPs agreed on a post-Brexit trade deal with the EU. As it is known that consensus has been agreed. As of 1 January, the UK has officially seceded from the EU. Brexit rules have already come into use.

The UK can now make its own policy for a few things. Although no fees are charged when crossing the border, people still have to adapt. This is because it takes some paperwork when they are going through the border area. This adaptation certainly takes time.

Pound and Other Currency News

The pound reportedly stretched to touch $1.3647. This is a level not seen since May 2018. Against major currencies, the dollar has even slumped to 89.62. Many sources say that the decline in the value of the USD is one of the largest so far.

The USD reportedly touched its lowest level since April 2018. The condition recorded a decrease of 7.2% this year. However, the decline was still not less than 13% at a peak of 102.99. The figure was reached during market turmoil in mid-March.

The next target is 89,277 and then it goes to 88,251. This is the absolute lowest level in 2018. This means that the lowest level occurred about two years ago. However, in 2021, many market participants view trading optimistically.

The outlook for 2021 is considered to be brighter than in 2020 due to the pandemic. That view has reduced the need for safe-haven dollars and at the same time increased the attractiveness of riskier assets. This happens in several places, especially in emerging markets.

Twin Deficits Appear Again

The dollar's decline has also revived the reason for the "twin deficits" to shorten the currency. The reason is an explosion in the budget and trade deficit. The situation means there will be more USD printed and transferred abroad.

From this perspective, the new U.S. stimulus bill has a negative value for the dollar. How could that be? Those conditions are likely to add to the country's debt, and President-elect Joe Biden is promising more stimuli for next year. Many parties are still highlighting it.

In contrast, the EU is experiencing a huge current account surplus. Most of the smuggling is because of Germany. Such conditions will eventually create a natural inflow to the euro through existing trade in global markets. Market participants often predict it.

However, the presence of a vaccine that is expected to be injected this year brings a lot of new hope. Analysts expect the pandemic to end soon so that conditions in the global market will definitely improve. This is not only for currencies but also for important commodities.