Market Extra: One measure of the U.S. dollar is on pace for the lowest close in about 2 years

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A popular measure of the U.S. dollar on Thursday was on track for its lowest close in nearly two years, extending a decline in the greenback that has accelerated in recent weeks in the fallout from the COVID-19 pandemic.

The ICE U.S. Dollar Index DXY, -0.27% was down 0.4% at 94.647, at last check Thursday afternoon. That puts the index, which measures the buck’s strength against six rival currencies, on pace for its lowest finish since Sept. 26, 2018 when it finished at 94.19, according to Dow Jones Market Data.

The dollar index is on track for its fifth straight weekly decline, which has largely been driven by a rally in the euro vs. the U.S. dollar, as the European Union forged a $2 trillion coronavirus-relief agreement earlier this week that was seen as stabilizing the eurozone economy, bolstering buying in the bloc’s currency.

The euro EURUSD, +0.30% makes up the lion’s share, 57.6%, of the ICE dollar index, with the Japanese yen USDJPY, -0.31% and the British pound GBPUSD, +0.03% rounding out the currencies carrying the biggest weightings in the DXY, referring to the dollar index’s ticker.

Over the past three months, the DXY has weakened by 5.8%, with a chunk of that weakness playing out within the past month.

The euro, meanwhile, has surged against greenback, last buying $1.1619, up 0.4% on Thursday, and up more than 7% against the dollar in the past three-month period.

The slide in the dollar on Thursday came as Treasury Secretary Steven Mnuchin, speaking on CNBC, vowed to protect the reserve-currency status of greenback.

“We want a stable dollar,” Mnuchin says. “The dollar reflects lots of money coming back into the United States…it is the reserve currency of the world and we’re going to protect that,” he said.

A number of strategists have raised concerns, however, that the dollar could see further weakness as the U.S. government spends trillions to help limit the economic damage from the viral pandemic.

ReadThe decline of the U.S. dollar could happen at ‘warp speed’ in the era of coronavirus, warns prominent economist Stephen Roach

Also readThe U.S. dollar is getting punched in the mouth, and its outlook amid coronavirus doesn’t look great, some experts say