US Dollar Declines as Currency Traders Collect Profits

The US dollar moved marginally lower against its major peers on Friday, the last day of trading before the Christmas holiday season. A preference of collecting profits from the greenback’s rapid rise was shared by most traders amid thinning trading volumes today.

The US currency was boosted to its highest level in 14 years by investors’ anticipation for higher interest rates due to increased fiscal spending under the administration of President-elect Donald Trump in 2017. Following its meeting on December 14, the Federal Reserve said in a statement that it could raise interest rates three times in 2017, one time more than its previous forecast.

The faster pace of interest rate hikes will certainly help the dollar continue its rally. A number of recent data releases showed that the world’s largest economy has a steady and stable growth, which will further support the dollar and the Federal Reserve’s case for higher rates.

However, traders collected profits as they were concerned that the rapid rise of the dollar could be followed by strong corrections in the early months of 2017 if Trump’s plans faced a lot of legal opposition.

EUR/USD traded at 1.0456 as of 22:05 GMT on Friday, after touching 1.0459 at 21:40 GMT, the pair’s highest level for the day. EUR/USD opened trading today at 1.0432.

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