The US dollar (USD) recorded a downtrend in the European trading session on Wednesday. The USD traders were not happy at all to look at the downtrend recorded by the dollar in the latest session.
Dollar Handed Back Gains
Before the recent sessions, the trading price of the dollar had been gaining some strength. Slight momentum was built that saw the price of the dollar move in the upward channel.
However, the recent developments have resulted in pulling the trading price of the dollar. Due to the minutes to be shared by the US Feds, the trading price of the dollar has recorded a decline.
The dollar seems to have returned the gains it had managed to generate in the previous sessions.
Traders Await Meeting Minutes
With the completion of each month, the US Feds hold a meeting as they lay the entire economic data in front of them to discuss their future actions.
The monthly meetings among the US Feds set the monetary policy of the country on course for another month. The minutes from the Feds’ meetings reveal what the intentions of the Feds would be in the future.
When it comes to the monetary policy, the traders want to know what the Feds have decided for the interest rates.
For months, the US Feds have continued increasing the interest rates to deal with rising inflation rates. Month after month, they have kept increasing the interest rates and as of now, the annual interest rate expectation is set to more than 6.0%.
The traders are eager to know what the meeting minutes would reveal in the upcoming days. If the Feds stick with the ongoing monetary policy, it would suggest that the trading price of the dollar would continue surging.
This would let the investors decide what they need to do in near future. If the Feds remain hawkish about interest rate hikes, then the traders will start investing heavily in the USD.
This would push its price higher in the forex market and other major currencies will lose their strength.
DXY Gets Pulled by 0.1%
The US dollar index did not see a bright day in the latest session. This is because the DXY was pulled down by 0.1%, bringing its trading value against the major currencies to 104.025.
Even though the DXY has recently recorded a downtrend, it is still close to the 0.3% surge, which is the six-week high DXY that was recorded on Tuesday.
It was on Tuesday when the trading price of the dollar bounced and it was mainly because of the unexpected data that save the day for the greenback.
The data shows that business activity in the United States recorded a rebound in the month of February. It literally hit its 8-month high level.
The data showed that retail sales did not lose their strength and remained healthy in the United States. Even the labor market remained very tight in the month and the inflation rates also moved in the upward direction.
The Treasury yields for the United States have been pumped in strength in recent sessions because of the overall economic performance of the country.
The economic progress has given headroom to the US Feds as they can continue hiking the interest rates as necessary.
Dollar’s Decline against the Currencies
For now, there are mixed comments from economists pertaining to interest rate hikes. With growing fear of recession, the Feds may also rethink their strategy to control inflation.
With so many hikes implemented by the Feds, the room is running out for the Feds to introduce further increases.
Until the minutes come out, no clear prediction can be made about the trading price of the dollar. Until then, the market has to deal with the current sentiments of the investors.
The EUR has surged by 0.1% against the greenback, while the GBP has also edged higher. The USD failed to compete with the JPY losing 0.2% in strength against the yen.