Dollar Eases Ahead of Fed Decision

On Wednesday, the US dollar slumped against a basket of major currencies, but was close to the high of two decades that it had reached in the previous session. Meanwhile, traders are waiting for a decision about the interest rate hike from the US Federal Reserve that will be announced later in the session. An unscheduled meeting of the European Central Bank (ECB) gave the euro a modest lift, while keeping the pressure high on the greenback.

What to Expect from the Fed?

Last Friday, the US consumer price index (CPI) data for May showed that inflation had increased more than expected. This has led to expectations that the interest rate boost from the Fed would be higher than previously forecast. This knocked down the demand for riskier assets amongst investors and gave the safe haven dollar a good lift.

Almost 90% expectations are that the Federal Reserve will announce an interest rate hike of 75 basis points when the two-day meeting of the Federal Open Market Committee (FOMC) comes to an end. However, since there is already such a large rise in the interest rate expected, there is a less chance of the US dollar gaining further.

According to market analysts, the dollar had seen some mild retracement because market expectations are already priced in for a major hike. The dollar declined 0.06% against a basket of its peers, and reduced to 105.23. However, it was still close to the two-decade high of 105.65 that it had reached on Tuesday.

Data highlighting an unexpected fall in the US retail sales in May did not give much support to the dollar, as there was a decline in motor vehicle purchases and shortages in the market. Plus, the high prices of gasoline also reduced spending on other goods.

Euro Rises Against USD

Meanwhile, the session saw the euro climb against the US dollar because of an ad hoc meeting announced by the European Central Bank (ECB). Traders were hoping that the meeting would focus on dealing with fragmentation in the region. But, the single currency was not able to hold onto the gains for long.

The ECB announced that it was indeed coming up with a tool that would address the fragmentation issue, which caused the markets to breathe a sigh of relief. There had been worries about the impact of the monetary policy of the ECB on the 19 nations that are part of the euro zone. Some countries have already recorded immensely high bond yields.

But, analysts said that this surprise meeting of the ECB did not provide as many details as their last week’s policy meeting. While the markets are now aware that a fragmentation tool is in the works, there is still nothing tangible for the euro bulls to report. There was a 0.08% increase in the euro, as it reached $1.0422, after it had gone as high as 1.0507 in the session. Meanwhile, Sterling also made a recovery from its lowest level against the greenback since March 2020.

Leave a Reply

Your email address will not be published.

Related Removes Cryptocurrencies from Earn Program

The current turmoil in the cryptocurrency market has forced a number of companies in the space to shift their strategy and come up with new approaches that can help them pull through the downtrend. is also doing the same as it announced that they are making changes to their rewards program called Crypto Earn. […]

A Particular Even May Help Recover Shiba Inu’s Price

The trading price of Shiba Inu (SHIB) experienced a gigantic plunge that was triggered due to the recent bloodbath of cryptocurrency. SHIB Bleeds Badly As the cryptocurrency industry suffered a bloodbath, the trading price of Shiba Inu experienced an even worse situation. SHIB’s trading price reportedly suffered double-digit losses. Despite suffering huge losses, the analysts […]

Price of Bitcoin Suffered another Dip Due to Cypherpunk Holdings

The price of Bitcoin (BTC) ended up experiencing a dip and it came down to $20,200. Bitcoin’s price dipped due to a strong selling that was nothing less than a bloodbath. A great sell-off activity was recorded for Bitcoin that was triggered by multiple institutions. Even the investment firms ended up selling Bitcoin on a […]

Stocks Slip and Yields Ease in Light of Powell’s Comments

On Wednesday, global indexes saw stocks edge lower for the most part, while Treasury yields eased, as investors were taking in the comments of Jerome Powell, the Chairman of the US Federal Reserve. He said that while there was certainly a risk of the economy slowing down too much because of aggressive hikes in interest […]

Asia-Pacific Stocks Gain with Investors Weighing Economic Concerns

On Tuesday, shares in the Asia-Pacific region climbed higher, as investors were weighing the economic concerns. Most indexes record gains The Hang Seng index in Hong Kong had been trading at a loss but rose 0.7% in the last hour of trading. There was also a 0.73% gain in the Hang Seng Tech index. On […]