The U.S. dollar remained above its lowest level in five months against major currencies on Tuesday, while investors awaited the latest economic forecasts from the Federal Reserve amidst growing concerns over global trade tensions.
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The euro held steady near 1.0947 dollars, its highest level since October 11, ahead of a vote expected on a massive German stimulus package. Meanwhile, the yen lost some of its recent gains due to increased demand for it as a safe-haven asset.
The U.S. dollar has been affected by mounting concerns that the strict tariff policies implemented by President Donald Trump could lead to a broader economic slowdown, weakening the dollar amid a series of weak investor confidence surveys.
Analysts expect the Federal Reserve, Bank of Japan, and Bank of England to keep interest rates unchanged during their meetings this week, with markets focusing on any forward guidance from policymakers. In this context, the U.S. central bank is also expected to release new economic forecasts, which will provide investors with a clearer view of how they are assessing the impact of Trump's policies on the U.S. economy.
Regarding inflation, Bart Wakabayashi, the head of State Street in Tokyo, noted that inflation expectations have risen, but confidence has declined, stating: "It’s a very cloudy moment, and I don’t think the Fed has enough data to make a clear decision."
Currently, investors are betting on a 60 basis point cut in interest rates, slightly more than two additional rate cuts during the year. Citi FX analysts believe that the central bank is likely to lean towards monetary easing if growth and employment remain weak alongside rising inflation.
Other Currency Movements:
The British pound remained at 1.29755 dollars, near its highest level since November 7.
The Australian dollar held steady at 0.63695 dollars, after reaching its highest level in nearly a month on Monday.
The New Zealand dollar fell by 0.13% to 0.58145 dollars, after hitting its highest level since December 10.
Bitcoin dropped by 1.6% to 82,633.27 dollars.
Markets Await Economic Guidance Everyone is awaiting statements and decisions from central banks in the coming days amid economic uncertainty and concerns over trade tensions and their potential impact on the global economy.
