Affected by the continued economic recovery under the COVID-19 pandemic and the ultra-loose stimulus, the U.S. dollar exchange rate has continued to fall recently. The depreciation rate in July reached 3.8%, and the nearly 4% decline is expected to become the U.S. dollar’s ​​worst monthly performance in nine years.

According to market data, the U.S. dollar index, which measures the U.S. dollar against six major currencies, fell 0.82% on the day and closed at 93.6738 in the end of the foreign exchange market, a record low in the past two years.

In recent weeks, investors have dumped U.S. dollars and bought currencies from countries with less epidemics. This has caused the US dollar to depreciate by 3.8% since July, which may become the worst monthly performance in more than nine years.

The recent surge in the number of cases in parts of the United States has prompted local authorities to suspend or cancel plans to resume business activities, which has raised doubts about the economic outlook. The most severely affected states include California, Texas and Florida, which together account for more than a quarter of the US gross domestic product (GDP).

Last week, the number of people claiming unemployment benefits for the first time climbed for the first time in four months, indicating that the economic recovery may be faltering. This data can reflect the health of the labor market.

Investors expect that the US Federal Reserve (Fed) will reconfirm its ultra-loose policy at its policy meeting this week, and may imply that it will endure high inflation for a longer period of time, which will put pressure on the dollar.

“Fed officials have made it clear that they will soon make forward-looking guidance that is more moderate and based on the development of the situation.” TD Securities analysts wrote.

Ruskin, director of G10 strategy at Deutsche Bank, pointed out that exchange rate trends have been following the relative performance of their respective economies, so the currency exchange rates of better performing economies will also strengthen.

Fed officials have warned this month that if the United States does not take more effective actions to slow the spread of the virus, the economy will face a deeper recession and recovery will be more difficult.

Mitsubishi UFJ Bank’s head of global market research in Europe, Halpeni, said that economic signals show that the V-shaped recovery has basically stopped. It is no longer V-shaped. The recovery momentum is flattening out. Halpeni said: “The optimism in June will disappear, and the message will be that the Fed needs to take more action.”

Tradeweb data shows that the 10-year U.S. Treasury bond yield dropped to 0.584% from 1.910% at the end of last year. The real yield on U.S. Treasuries fell sharply, exacerbating the weakness of the dollar.