Dollar continues recovery from selloff, yen watched for intervention
Traders also remained on alert for potential intervention in the Japanese yen as it holds above the 150 level against the dollar.
Many economists and analysts expect the U.S. economy to slow in the fourth quarter, which makes further rate hikes less likely and will dent the appeal of the greenback, which has benefited from the relative strength of the United States compared to other major economies.
“The dollar is vulnerable to weaker data going forward," said Shaun Osborne, chief foreign exchange strategist at Scotiabank in Toronto.
«We’re transitioning to a sort of sell dollar rallies environment, after the buy dollar dips trend that we’ve seen really since the middle of the year.»
That said, the dollar may continue to gain in the short-term as it recovers from last week’s selloff, which was viewed by some as overdone.
“Essentially it’s a period of consolidation for the U.S. dollar generally… That probably will continue for a little bit longer,” said Osborne.
The greenback suffered after Fed Chair Jerome Powell was interpreted as striking a dovish tone at the conclusion of the Fed’s two-day meeting last Wednesday, when it left interest rates unchanged.
Powell did not comment on monetary policy in a speech on Wednesday.
He is also due to speak on Thursday. Futures point to a roughly 17% chance of another hike by January, but are pricing in a 20% chance that rate cuts could come as early as March, according to the CME FedWatch tool.
The dollar index was last up 0.10% at 105.63.
It fell 1.4% last week, its steepest weekly decline since mid-July.
Weaker-than-expected jobs data for October on Friday added to last week's selloff. The next major U.S.
