Dollar just higher ahead of Fed minutes; euro awaits confidence data

investing.com:

Investing.com — The U.S. dollar traded marginally higher in early European trade Wednesday, as traders awaited the release of the minutes from the latest Federal Reserve meeting for further clues of the path of U.S. interest rates.

At 04:05 ET (09:05 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 104.102. 

The dollar has slipped back slightly of late after waning expectations of early interest rate cuts by the Fed had seen the greenback climb to three-month highs.

The currency’s upcoming direction could well be decided by what the minutes from the January Federal Reserve meeting, due for release later Wednesday,  indicate in terms of the outlook for U.S. rates.

“Recall this was seen as a pretty neutral meeting until Fed Chair Jerome Powell used an opportunity in the press conference to say that a March rate cut was unlikely,” said analysts at ING, in a note.

Traders are currently pricing in around 90 basis points worth of easing by the Fed this year, probably starting in June.

Beyond the minutes, a slew of Fed officials are also set to speak this week, including Raphael Bostic and Michelle Bowman later on Wednesday. 

In Europe, EUR/USD edged higher to 1.0807, ahead of the release of the latest consumer confidence figure for the eurozone.

This is expected to show a small improvement in February from the previous month, although it will likely remain very weak.

“If there is a ray of light for the eurozone economy it may be that wage growth is not falling as quickly as inflation and that there may be a boost from rising real incomes after all,” said ING.

GBP/USD traded marginally lower at 1.2616, after data showed that Britain recorded its highest ever