FOREX-Dollar Edges Lower in Pullback from Nearly 3-Month Peak
The dollar experienced a dip on Wednesday, moving away from its nearly three-month pinnacle against the euro, impacted by a decrease in U.S. bond yields. This adjustment arrives after the currency’s significant rise, fueled by potent U.S. employment statistics and the Federal Reserve Chair’s hawkish comments, which halted early rate cut speculations.
Falling U.S. Treasury yields, following sturdy demand for a new tranche of three-year notes, contributed to the dollar’s weakness. Consequently, the dollar dropped 0.16% to $1.0772 against the euro and saw a slight decline in the U.S. dollar index by 0.1% to 104.04.
Experts suggest the Treasury’s rebound permitted some retreat from strong dollar positions. While March rate cut probabilities have diminished, the market remains cautious about fully endorsing a robust dollar outlook due to anticipated rate reductions later in the year.
The upcoming U.S. inflation figures are seen as a crucial determinant for future Federal Reserve rate decisions. Current expectations reflect a reduced probability of a rate cut in March, highlighting the reevaluation of Fed policies in financial markets.
In other currency movements, the dollar gained slightly against the yen, and the British pound appreciated against the dollar, supported by rising house prices in Britain, hinting at sustained interest rates by the Bank of England.
