The dollar fell in European trade on Monday against a basket of major rivals, giving up five-week highs and on track for the first loss in three days on active profit-taking.
Investors still expect the Federal Reserve to cut interest rates starting next June, which hurts the appeal of the US currency.
The Index
The dollar index fell 0.15% today to 103.28, with a session-high at 103.48.
The index closed Friday 0.4% higher, the second profit in a row, hitting a five-week high at 104.50 on active investment demand.
The index rose 0.95% last week, the second weekly profit in a row on strong expectations that central banks in Europe, the UK, and Switzerland will take a more accommodative stance on monetary policies compared to the Federal Reserve.
US Rate Prospects
The markets are pricing in a 75% chance of a Fed interest rate cut in June, with a total of 75 basis points of US interest rate cuts expected this year.
Now investors await a series of remarks by Fed officials later this week, in addition to important US personal spending data to gauge the path ahead for policies.
The Dollar Outlook
Credit Agricole’s forex analysts said in a memo that the dollar is likely to perform better than the euro, which is more exposed to downward pressures in upcoming days.
They believe that the US economy remains flexible , with a tight labor market, which could lead to a more bullish Fed stance on policies this year.
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