Last week’s disappointing economic data from the US forced the US Dollar lower where it has finally steadied. The Dollar has now been under pressure for nearly seven weeks as investors ponder the likelihood of a Fed interest rate move, which put an end to the greenback’s long-term buoyancy. Economists have dismissed the latest figures as a factor of bad weather thus investors have expectations of an improvement during next month’s round of those data releases. What is going to be highly watched will be this week’s release of the Federal Reserve Bank’s upcoming monetary policy decisions and the protocols or the “thought process” that went into it.
As reported at 8:57 am (BDT) in London, the USD/JPY pair was trading at 118.15 Yen, a loss of 0.1% and moving away from 120.10 Yen, the high of last week. The EUR/USD was lower at $1.0828, near the low end of today’s trading range of between $1.0821 and $1.0887.
Fed Likely to Sway Dollar Trade
Currency strategists point out that the risk of a Dollar correction is higher than normal given the absence of positive data. FX traders will be watching for the Fed’s reaction to the recent dismal data with a view to moving back to long Dollar positions, provided the Fed dismisses the weaker economic data as transient.