The super dollar moderated losses with the focus on the Federal Reserve

The super dollar pared previous losses and sterling fell on Tuesday as traders believed that tensions in the banking sector would prevent the Federal Reserve and Bank of England from raising rates much higher this week, or even if they do. would increase.

After several days of market volatility due to concerns about the stability of the global banking sector, investors’ attention turned to a series of central bank meetings scheduled for this week.

dollar index -which measures the performance of the US currency against a basket of six currencies- It shed as little as 0.058% to 103.090, while sterling was down 0.59% at $1.2204.

Markets price the chance of the Federal Reserve raising rates by 25 basis points at 85%, according to the CME’s FedWatch tool. A few weeks ago, the maximum for the rate stood at 5.5%, compared to the current 4.8%.

The dollar has followed these expectations downward, although the general nervousness of the financial markets has moderated the selling. Investors remain worried about the fate of the banking sector, after shares in US lender First Republic plunged nearly 50% on Monday on fears it needs a second bailout.

“(The Fed) should note that inflation is still the target, but obviously properly address what has been done, and highlight what it can do to continue to prevent any contagion beyond the First Republic,” said Edward Moya, OANDA’s senior market analyst.

Sterling fell but remains near a nearly seven-week high against the dollar after data showed Britain posted a budget deficit of 16.68 billion pounds ($20.4 billion) in February, well above expectations of a Reuters poll. The euro rose 0.39% to $1.0761.

Regarding cryptocurrencies, Bitcoin gained 0.32% to $28,168, after hitting a nine-month high on Monday. The world’s largest cryptocurrency climbed 26% last week, its biggest weekly gain since April 2019.