The U.S. dollar remained near multi-week lows against the major currencies on Tuesday. Declining Treasury yields weighed on the greenback ahead of the Federal Reserve’s policy decision this week. Besides, stocks rallied worldwide during this week, hitting record highs. The safe-haven dollar was out of favor as investor confidence in a rapid global recovery from the coronavirus pandemic increased. The Japanese yen also moved in a narrow range after the Bank of Japan kept its policy on hold.
The dollar index changed insignificantly at 90.947 against six peers in the mid-Asian session, after tumbling down to the lowest level since March 3 overnight at 90.679.
The greenback climbed up by 0.1% to 108.18 Japanese yen, another safe-haven currency, continuing its surge from the seven-week low of 107.48 reached Friday.
Kyosuke Suzuki, the chief of financial algotech company at Ryobi Systems, noted that it seems the greenback doesn’t have the strength it had earlier this year. He added that the dollar had been driven by various investor expectations, such as fast COVID-19 vaccinations and massive fiscal spending in the States.
Meanwhile, the Japanese yen was low after the Bank of Japan’s announcement that it would keep its monetary policy on hold. Investors widely expected this.
In the U.S., the Federal Open Market Committee is due to end its two-day meeting on Wednesday. Investors don’t expect any policy changes, but they are still watching for comments from Fed Chairman Jerome Powell.
Gavin Friend, a strategist at National Australia Bank, stated that the reflation trade is back on. He added that currencies outside of the greenback should be doing quite well in that environment.
How Did Other Currencies Trade on Tuesday?
The euro plummeted down by 0.1% to $1.2071. However, it still traded close to the two-month high of $1.2117 reached Monday.
The commodity-linked Australian dollar also declined by 0.15% to $0.7789, after rallying by 0.7% overnight.
Meanwhile, the offshore Chinese yuan lowered by 0.1% after hitting a seven-week high of 6.4710 per dollar on Monday.