The dollar fell at the open of European trade on Monday, with progress on COVID19 vaccines lifting risk appetite, while the British pound rose more than 1 after Britain and the European Union agreed on Sunday to carry on with Brexit negotiations.
The United States launched its first shipments of the COVID19 vaccine to distribution centres on Sunday, raising hopes for a swift recovery from the global coronavirusinduced economic downturn.
The dollar was down around 0.2 against a basket of currencies at 90.621 at 0804 GMT, staying within Decembers ranges but not far from its lowest since 2018.
The risky Australian and New Zealand dollars were also up, close to their strongest since 2018. At 0821 GMT, the Aussie a liquid proxy for risk was up 0.4 versus the dollar at 0.75655.
U.S. dollar net short positioning in the latest week climbed to its highest since late September, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.
The dollar is starting the week on the backfoot as risk appetite remains fairly upbeat on the back of vaccine rollout news, lingering hopes around a U.S. fiscal stimulus package and some optimism on Brexit negotiations, wrote ING strategists in a note to clients.
A 908 billion bipartisan COVID19 relief plan, which could be introduced in the U.S. Congress as early as Monday, will be split into two packages in a bid to win approval, a person briefed on the matter said.