U.S. Dollar Declines Ahead of ECB, BoE Meetings

The U.S. dollar continued its weekly decline today, as the market participants awaited the results of the European Central Bank and the Bank of England monetary meetings.
The yield difference between the short-term European bonds and the U. S. Treasuries are at its widest value in 15 years. This fact forces more investors to convert dollar to euro in order to buy the more yielding assets.
The analysts expect that the ECB will keep the rates unchanged today at 4.00% — the 5-year high level, and that BoE will abstain from lowering the rate this time too. Meanwhile, almost every market participant is ready for the next rate cut by the U.S. Fed, and this cut is expected to be not less than 50 basis points.
The interest rates pressure on dollar can’t go unnoticed on Forex market: EUR/USD reached its new maximum today at 1.5344 and GBP/USD went up from 1.9920 to 1.9969 during the Asian session alone.
A major surprise for all traders may happen today if the ECB lowers the interest rate. That will surely make euro plunge deeply and fast for the next few days. Of course, chances for such monetary policy decision are extremely slim.

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