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Market Analysis

Dollar Retreats from Peaks Ahead of PCE Data; Euro Finds Support
Amos Simanungkalit · 22.9K Views

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The U.S. dollar slightly declined on Monday, consolidating after reaching a nearly two-month peak last week. Meanwhile, the euro strengthened despite a decrease in German business sentiment.

 

As of 05:25 ET (09:25 GMT), the Dollar Index, which measures the dollar against six other major currencies, was down 0.2% at 105.235, having peaked at 105.91 recently.

 

The dollar gained ground last week following better-than-expected PMI data, signaling strength in the U.S. economy and potentially allowing the Federal Reserve more room to maintain higher interest rates.

 

Traders took profits early in the week ahead of the release of the PCE price index, a key inflation indicator for the Fed. A softer reading could increase expectations of a rate cut as soon as September, currently priced at a 65% probability by the CME FedWatch tool.

 

Despite a drop in German business confidence reported by the Ifo Institute, the euro managed a 0.2% increase against the dollar, reaching 1.0718. The decline in the German business climate index to 88.6 in June, below expectations of 89.7, reflected ongoing economic challenges.

 

GBP/USD rose 0.1% to 1.2659 as the pound stabilized following the Bank of England's decision to maintain rates, though some policymakers hinted at a potential cut in August.

 

In Asia, USD/JPY traded slightly lower at 159.68 after peaking at 159.94 earlier in the session. Concerns over the yen's weakness prompted Japanese officials to signal potential intervention to support the currency.

 

USD/CNY edged up to 7.2618, trading in a narrow range near its lowest level in seven months amid concerns about China's economic outlook.

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.

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