Dollar rally loses steam as traders wait on Fed, data
The dollar was parked below recent peaks on Tuesday, as a three-week rally faded and traders waited on economic data to figure out whether it’s warranted to push the dollar up any further.
Strong U.S. labour data and sticky inflation have raised U.S. rate expectations and supported the dollar’s rally this month – Tuesday’s European and U.S. manufacturing data and Friday’s core PCE price index will guide the next steps.
After a quiet Monday thanks to the President’s Day holiday in the United States, the dollar stood steady at 132.24 yen and $1.0666 euro , with the common currency finding strong support above $1.06.
The U.S. dollar index has climbed three weeks in a row for a gain of about 1.7% through February so far, but has steadied around 104, down from a six-week high of 104.67 hit on Friday.
“Friday’s inability of euro/dollar to push lower after breaking below $1.0650 rather sums up the FX market for me,” Societe Generale strategist Kit Juckes said.
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