Dollar Under Pressure, Euro-Pound Rises: Markets on Alert Ahead of the Fed
The US dollar has continued to weaken for three consecutive days and is approaching its weakest zone since 2022, as the options market increasingly favors a weaker USD scenario—as if traders are beginning to assume Washington doesn't mind a dollar decline.
Pressure on the greenback comes from a mix of issues: trade tensions, geopolitical risks, and the looming US government shutdown, which has investors rushing to hedge and reduce exposure to dollar assets.
At the same time, the yen is in the spotlight. Speculation about intervention intensified after a "rate check" report from the New York Fed triggered the unwinding of short yen positions, coupled with signals from Japanese officials that they are ready to act if movements are deemed speculative and "abnormal."
The market is also awaiting two "triggers" this week: the FOMC meeting results and rumors about the appointment of the next Fed chair. This combination makes FX volatility even more volatile, as it concerns the direction of interest rates and policy credibility.
While the dollar weakened, European currencies also benefited. The euro and pound strengthened as the "dollar selling" trend intensified, especially after solid UK data boosted sterling.
Updated prices (indicative intraday)
Dollar Index falls to 97.01 (-0.46%)
USD/JPY: 154.18 (-0.64%)
EUR/USD: 1.1881 (+0.45%)
GBP/USD: 1.3676 (+0.29%)
USD/CHF: 0.7768 (-0.45%)
USD/CAD: 1.3716 (+0.13%)
Going forward, the market will be highly sensitive to two things: Powell's tone (hawkish vs. dovish) and headlines regarding the yen's actions. As long as these two themes remain unclear, the dollar is vulnerable to continued volatility.
Source: Newsmaker.id
