The dollar edged higher against the euro and the Japanese yen on Friday. Investors speculated that the US currency will continue strengthening next week due to an anticipated monetary policy decision from the Federal Reserve.
The dollarâs steady climb today followed a sharp gain on Thursday that resulted from the European Central Bankâs announcement that it will be reducing the value of its quantitative easing program from April. However, it will also extend the programâs period by nine months to December 2017.
European Central Bank President Mario Draghi added that the program might be extended again in future policy meetings. The decision delivered a blow to the euroâs exchange value, as the shared currency had its biggest decline in a single day since the Brexit referendum in June.
The dollar also rose against the yen as investors within Japan sold their safe haven Japanese currency to profit from gains of the nationâs stocks. Demand for the yields on the benchmark US Treasury notes for 10 and 30 years increased, lifting the yields higher, which further supported the US currency.
Traders are now paying full attention to the Federal Open Market Committeeâs meeting on Wednesday, which is expected to result in a decision to raise US interest rates. The interest rate hike, which has a 97.2% probability of being decided, will offer the dollar more strength against its major peers.
EUR/USD traded at 1.0549 as of 19:54 GMT, after touching 1.0531 at 17:19 GMT, the pairâs lowest level for the day. EUR/USD opened trading today at 1.0617.
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