Today, the dollar experiences a notable drop, retreating from the levels almost three months previously reached against the euro. This downward movement is influenced by the decrease in US bond yieldsgenerating additional pressure on the currency.
Analysts point to technical factors as an explanation for the dollar’s reversal, after a two-day increase that took it up to 1.4% against the euro. This rebound is driven by solid jobs data in the United States and a more aggressive tone from the president of the Federal Reserve, Jerome Powellwhich dismisses expectations of an imminent interest rate cut.
U.S. Treasury yields also retreat from their highs on strong demand at an auction of new three-year bonds, contributing to waning support for the dollar.
Dollar vs. other currencies
In terms of figures, the dollar shows a decrease of 0.1%, trading at 1.0762 per euro. The dollar index, which evaluates the performance of the greenback against six major currencies, including the euro, is down 0.04%, settling at 104.10 after falling 0.29% the previous day. On Monday, this index had reached its highest point since November 14, standing at 104.60.
Despite the steeper-than-expected decline in industrial production in the eurozone’s largest economy, the euro is not significantly affected. Chris Turner, Global Director of Markets at ING, highlights that the industrial unrest in Germany is already known.
The dollar, on the other hand, registered an increase of 0.08% against the yen, reaching 148.07 yen, after a fall of 0.49% in the previous session. This currency pair tends to be highly sensitive to movements in Treasury bond yields.
Analysts and traders are closely watching next Tuesday’s U.S. inflation data, seeing it as a key test for Fed rate bets. According to CME Group’s FedWatch tool, the likelihood of a rate cut Rates in March are 21.5%, compared to 68.1% recorded at the beginning of the year.
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