The US dollar retreated against its main counterparts on Monday to touch its lowest level in 7 weeks, as concerns grew between traders that the economic plans of the Donald Trump administration might face difficulties.
Traders became concerned that the new administration might be unable to implement its economic policies quickly enough for the US dollar to maintain its gains. The greenback had a rapid rally following Trumpâs victory in the US presidential election in November, but the president has yet to bring his economic plans and promises to reality.
The president promised to cut corporate taxes, reduce financial regulations, and increase infrastructure spending during his election campaign, which raised expectations of boosted growth. However, investors appear to expect more than promises to continue supporting the greenback.
Worries that the US currency could be overvalued are mounting, especially as the Federal Open Market Committeeâs statement last week revealed a stance that is less hawkish than expected. The statement, which followed a decision to raise interest rates by 0.25%, revealed that the Federal Reserve believes the economy could still use a gradual approach to higher interest rates to maintain the stability of its growth.
No major economic data was released today, however the market is anticipating a report due to be published tomorrow on existing home sales in February. Strong results may be able to nudge the US dollar higher.
EUR/USD traded at 1.0808 as of 19:20 GMT, after touching 1.0817 at 14:00 GMT, the pairâs highest level since February 2. EUR/USD started trading today at 1.0744. GBP/USD was at 1.2481, from 1.2491 at 17:00 GMT, a level last seen on February 24. GBP/USD began the day at 1.2369.
The Dollar Index, which tracks the performance of the US currency against a basket of its major peers, was at 99.73 as of 19:24 GMT, the lowest level since February 2. The index moved below the psychologically important 100.0 level earlier today, from 100.41 yesterday.
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