Dollar Bearish as Bets on Easing Rise

The U.S. Dollar Index continued to hold close to a 2-month low as investors gauge that the Federal Reserve’s response to lackluster economic data will either be a recommitment of its existing ultra-loose monetary policy or the promise of even more stimulus. A currency strategist from BNP Paribas expects that the Fed’s quantitative easing program will continue to be the name of the game at least through the year’s end with a likelihood of additional easing. An announcement of the Fed’s decision will be made later today at the conclusion of the 2-day meeting.

As reported at 3:37 a.m. (BST) in London, the U.S. Dollar Index was trading at 81.726 .DXY, only slightly improved from Tuesday’s low of 81.598 .DXY. The USD/JPY pair edged lower to 97.32 Yen, off 0.1% from late trading in New York, but still close to the 2-week trough of 96.99 Yen which had been struck on Tuesday. With the key 100.00 Yen level still eluding investors, currency analysts are reassessing that probability and believe that disappointing U.S. economic data could send the pair back down to the 95 to 98 Yen range. The EUR/USD pair traded near to a 2-week peak of $1.3187 yesterday and remained close at $1.3166.