Dollar retreats on rate cut hints; euro awaits ECB meeting
Investing.com — The U.S. dollar traded on the backfoot Thursday as potential Federal Reserve’s rate cuts appeared to draw nearer, while the euro slipped lower ahead of the latest European Central Bank meeting.
At 04:15 ET (09:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.220, near a one-month low.
The dollar slipped lower Thursday in the wake of the start of Fed chief Powell’s two-day testimony in front of Congress, as traders factored in U.S. interest rates falling this year even after some upside surprises on inflation.
Fed Chair Jerome Powell said on Wednesday that rate cuts will «likely be appropriate» later this year «if the economy evolves broadly as expected» and once officials gain more confidence in inflation's steady deceleration.
Powell appears before a Senate panel later Thursday, after testifying before the House on Wednesday.
“In the past, Fed Chairs have used the second leg to correct any market overreaction to the first leg,” said analysts at ING, in a note.
“However, we doubt Chair Powell has too many issues with the modest risk rally yesterday's testimony delivered, and he should present a pretty similar message today. That message remains that the Fed needs to be patient, but the game plan remains rate cuts later this year.”
In Europe, EUR/USD edged lower to 1.0895, after data released earlier Thursday showed that German industrial orders fell much more than expected in January.
Orders fell by 11.3% on a monthly basis, a sharp reversal from December’s revised 12.0% increase.
The ECB meets later in the session and is widely expected to leave interest rates at a record 4%.
“We expect further subtle changes to the European
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