The U.S. Dollar was steady versus major rivals during the Asian trading session Monday with investors wary ahead of the Federal Reserve’s 2-day policy setting meeting which begins tomorrow. Given the recent state of the U.S. economy most analysts believe that the Fed’s FOMC won’t make any pertinent changes to the existing ultra loose policy. They believe that the central bank’s monthly asset purchases of $85 billion will continue for some time, probably until the end of the first quarter of 2014 and that the Fed will strongly hint at that likelihood. Upcoming data releases in the U.S. will also be carefully scrutinized to provide some hint of the Fed’s future thinking.
As reported at 11:15 a.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.3808, slipping from Friday’s near 2-year peak of $1.3833 on the EBS trading platform and analysts peg the Euro’s resistance level close to that recent high. One trader said that even a recent disappointment in German business sentiment failed to knock down the common currency’s buoyancy, and that it had been moving steadily through key levels without corrections. The U.S. Dollar Index remained near to Friday’s 9-month trough of 78.998 .DXY.
Dollar Edges Higher on Yield Differentials
Meanwhile, the USD/JPY pair moved 0.3% higher to 97.63 Yen, moving away from Friday’s trough of 96.94 Yen, a fresh 2-week low. Support for the greenback is being provided by the investor’s belief that the yield differentials will continue between U.S. Treasuries and their Japanese counterparts so long as the respective central banks continue to take opposite positions regards easing.