The euro added 0.01% to $1.07415, just below its seven-month high of $1.07605 hit on Monday. The pound sterling fell 0.18% to u$s1,21585, below the three-week high recorded the previous day.
The dollar has been falling as markets are increasingly doubtful that the Federal Reserve will have to raise interest rates above 5% to cool inflation, since the effects of their aggressive increases in the cost of credit have already been felt.
Last week’s jobs report showed that while the US economy added jobs at a brisk pace in December, it also recorded a slowdown in wage growth.
Investors now expect interest rates to peak at just under 5% in June, before starting to decline later in the year.
Federal Reserve Bank of Atlanta President Raphael Bostic and Federal Reserve Bank of San Francisco President Mary Daly said Monday rates have yet to move forward and will remain elevated.
But Fed Chairman Jerome Powell avoided talking about monetary policy in a speech in Sweden on Tuesday.
“Until a more dovish narrative emerges from the Fed, the dollar is likely to remain under pressure,” said Win Thin, global head of FX strategy at Brown Brothers Harriman, adding that the dollar’s weakness could be exaggerated.
Source: Ambito
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