The dollar index experienced a dip on Thursday but rebounded from a three-week low as investors awaited new data for insights into when the U.S. Federal Reserve might start reducing interest rates.
The greenback has seen gains this year due to strong growth and persistent inflation, causing traders to delay expectations of the U.S. central bank's easing. Despite reaching a three-month high last week, the U.S. currency has been consolidating recently.
Noel Dixon, Senior Macro Strategist at State Street Global Markets in Boston, stated that the dollar is likely to benefit from disparities with other countries as the U.S. economy appears relatively stronger.
However, Dixon noted some fatigue among dollar bulls after the recent strength and emphasized the need for more data for the dollar to break out.
The dollar index was down 0.03% at 103.95, reaching 103.43 earlier on Thursday, the lowest since Feb. 2. It is holding below the Feb. 14 level of 104.97, the highest since Nov. 14.
The upcoming release of Personal Consumption Expenditures (PCE) data may offer significant insights into Fed policy.
Minutes from the Fed’s January meeting, released on Wednesday, indicated policymakers' concerns about the risks of cutting interest rates too soon. Fed Vice Chair Philip Jefferson expressed the need to consider a broad set of economic indicators before deciding on rate cuts.
Recent U.S. data showed unexpected drops in jobless claims last week, while U.S. business activity cooled in February. Existing home sales also increased in January.
The U.S. dollar could find support in weaknesses in other regions, such as Canada and Australia, potentially leading their central banks to cut rates before the Fed.
The euro inched up 0.03% to $1.0820, reaching $1.0889 earlier. Sterling gained 0.17% to $1.2656, reaching $1.2710 earlier. The dollar rose 0.17% to 150.53 yen, just below its three-month high.
Cryptocurrency-wise, bitcoin increased 0.13% to $51,467.
Paraphrasing text from "Investing" all rights reserved by the original author.
