Dollar gains as central banks take central stage

NEW YORK (Reuters) – The dollar rose on Monday, a day before the Federal Reserve was due to begin a two-day policy meeting, while the euro was boosted by unexpectedly high inflation; data before the European Central Bank meets on Thursday.

Fed Chair Jerome Powell is in a “difficult position” because “they’re going to raise rates 25 basis points and yet he’s going to have to argue against the easing of financial conditions,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

The disparity comes in part as traders speculate that a weakening economy, and possible recession, will cause the Fed to pivot to a more dovish policy.

The dollar index has weakened to 102.27 from a 20-year high of 114.78 on Sept. 28 as investors price in the likelihood that the Fed is nearing the end of its tightening cycle. But it has been largely rangebound for the past few weeks as it hits technical support against major currencies including the euro.

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The question now is “does the dollar bounce or is this a nesting pattern before the next leg down,” Chandler said.


“EUR has front-run growth conditions (which have invariably improved) but markets may need something more to fade,” they said.

The euro fell 0.22% to $1.0844, erasing earlier gains after Spain’s consumer prices rose 5.8% on a year-on-year basis in January, the first increase in six months.

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The dollar rose 0.57% against the Japanese yen to 130.53.

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Sterling dipped 0.43% to $1.2345 ahead of the Bank of England’s meeting on Thursday.

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EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD, Gold, Oil and many many more..These are the three most traded currencies beside the US dollar. Lower market liquidity will mean that a broker will give wider dealing forex spreads. Todays Free Forex Signals 06 10 2022

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