Dollar hands back some gains ahead of Fed meeting; euro marginally up
Investing.com — The U.S. dollar edged lower in European trade Monday, handing back some of the previous week’s gains ahead of the upcoming Federal Reserve policy-setting meeting.
At 06:00 ET (10:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.035, after gaining around 0.5% last week, its first weekly gain in four.
The U.S. currency has started the new week on a slightly negative note, but remains near two-week highs after strong U.S. inflation readings from last week put traders on guard over any hawkish sentiments from the Fed, with the U.S. central bank holding a two-day policy-setting meeting this week, concluding on Wednesday.
Markets are currently pricing in around 75 basis points of cuts this year, down from around 140 bps at the start of the year, with around a 60% chance of the first rate cut coming by June, according to LSEG data.
The focus on Wednesday will be on whether Fed policymakers change their projections of rate cuts, or dot plots, for the year.
“There are currently three 25bp rate cuts in the median 2024 Dot Plot, but projections are so dispersed that it would only take two FOMC members changing their ‘dot’ to take the median to two or four rate cuts this year,” said analysts at ING, in a note.
“We expect an unchanged Dot Plot but admit that a hawkish revision looks more likely than a dovish one.”
In Europe, EUR/USD edged 0.1% higher to 1.0899, after eurozone consumer prices were confirmed falling nearer to the European Central Bank’s 2% medium-term target in February.
The final eurozone CPI came in at 2.6% on an annual basis in February, a drop from 2.8% the prior month, as widely expected, while the core annual number fell to
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