The greenback was clearly on the defensive during the Asian trading session as market players await a Fed decision which could impact the dollar’s direction. Despite recent upbeat economic data which some believe could sway the Federal Reserve to act sooner rather than later in the withdrawal of the massive stimulus scheme, the majority of FX traders are putting their bets on the Fed waiting to scale back until next quarter and even then at only a very moderate withdrawal of about $10 or $15 billion.
As reported at 11:15 a.m. (JST) in Tokyo, the U.S. Dollar Index was trading at 80.02 .DXY, edging off of Monday’s peak of 80.419 .DXY. The EUR/USD was trading at $1.3772, gaining upside momentum after last Friday’s trough of $1.37085 but still coming up short of October’s 2-year peak when the pair hit $1.3833. The USD/JPY pair traded at 102.57 Japanese Yen, slipping from Friday’s 5-year peak of 103.925 Yen.
Repatriated Funds Offers Euro a Lift
The Euro has been given a boost by the repatriation of funds from Eurozone-based banks prior to a decision following the ECB’s asset review which could result in the need for them to increase their capital base. Further weighing on the Dollar, many traders believe that Ben Bernanke will follow in the footsteps of his ECB counterpart did earlier this week and reiterate the need for enduring low interest rates.