During today's Asian trading, the US dollar declined slightly against major currencies, while market participants continue to focus on the prospects for the Fed's monetary policy. U.S. markets are closed for the Presidents' Day holiday, with volumes likely to be low through the day.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.10% to 104.19. Last week, the index rose by 0.18%, recording the fifth weekly increase in a row, as the latest US data increased the likelihood that the Fed will not rush to lower interest rates. This week, investors will pay attention to the minutes of the January Fed meeting, as well as speeches by a number of Fed policymakers, including Christopher Waller and Raphael Bostic. According to the CME FedWatch Tool, markets see a 35.6% probability of a 25 basis point rate cut at the Fed meeting in May, and a 73.5% probability of a rate cut in June, with approximately 90 basis points of cuts priced in for this year. According to experts, given the fact that bulk of the hawkish adjustment in the market may have taken place, the US currency is likely to consolidate in the absence of fresh catalysts.
The yen rose by 0.15% against the US dollar, returning to the important psychological level of 150, overcoming which prompted officials to comment on the currency moves and keeping markets on alert to a possible intervention. But the lack of interventions may have emboldened yen bears but suggested a range of 148-151 appeared likely for USD/JPY in the week. Since the beginning of this year, the yen has fallen by about 6% amid the widening interest rate gap between Japan and the United States.