US Dollar weakens ahead of fed policy decision

February 02, 2023 (MLN): The Federal Reserve policy decision is scheduled for Wednesday, and ahead of it, the value of the US dollar has weakened against the euro.

Investors are hoping for a signal from the US central bank that the interest rate tightening cycle has come to an end.

In January, inflation in the Eurozone had eased for the third consecutive month, but this had little impact on the euro.

The market is predicting that the Fed will raise its benchmark interest rate by a quarter of a percentage point to 4.75%, which would be the smallest increase in the past 10 months.

However, it is unclear if the central bank will signal further rate increases as both the economy and inflation show signs of losing momentum.

The dollar index, which tracks the US dollar against six major currencies, fell by 0.24% to 100.89.

This is a result of a combination of factors, including the slow pace of labor cost increase in the fourth quarter, and investors pricing at the end of the Fed's rate-hike cycle.

The index has fallen for four consecutive months and is far from its 20-year high of 114.78 on September 28th.

Copyright Mettis Link News