US Dollar Index weakens as banking turmoil -

US Dollar Index weakens as banking turmoil

FxPremiere.com – Telegram Forex Signals – The U.S. dollar slipped lower in early European trade Monday as traders reassessed the likelihood of another rate hike by the Federal Reserve later this month given the ongoing U.S. banking crisis.

At 04:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.6% lower at 103.528, trading near a one-month low.

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The U.S. authorities decided to step in over the weekend and cover all depositors at Silicon Valley Bank (NASDAQ:SIVB), which had to cease trading last week, as well as depositors at SignatureBank, which was wrapped up over the weekend.

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Both the U.S. Treasury and Federal Reserve were keen to make sure the second- and third-largest failures in U.S. banking history wouldn’t have wider repercussions, announcing emergency funding measures for the sector.

“Pressure on the U.S. banking system is questioning whether the Fed can push ahead with such an aggressive tightening cycle,” said analysts at ING, in a note. “One would normally think that a sell-off in equities is dollar bullish, perhaps not, however, if the epicentre for current stress is the U.S. banking system.”

Elsewhere, EUR/USD rose 0.8% to 1.0730, hovering near a one-month high with the single currency benefiting from the dollar selloff.

Additionally, the European Central Bank meets later this week, and is widely expected to raise interest rates by 50 basis points as inflation data last week pointed to underlying price pressure remaining elevated.

day percentage jump since Jan. 6, and USD/CNY edged lower to 6.9033.

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