Dollar Grains in tariff rates; The Euro looks at the ECB meeting by investing.com
Investing.com – The US Dollar entered Monday’s lower lows, again after recent losses as attention was paid to the return to trade tax rates from the Federal Reserve holding a policy setting meeting.
In 04: 35 et (09:35 GMT), the dollar index, which tracks the greenback against a basket of other currencies, traded 0.1% higher to 107.310, down 1% this week.
Tariff threat helps dollar
The dollar last experienced its weakest week since November 2023 as Donald Trump appeared threatened by trade tariffs, prompting traders to reduce the risk premium embedded in the funds of the most active partners.
However, these concerns have also been successfully used by the US, which is acting on the threat of import tariffs against Colombia to defend the purpose of its policy of bringing back illegal immigrants.
“The use of tariffs as a policy lever now seems to be well understood by the market and will probably reduce the risk intensity reduction,” ing analysts said in a note. “That being said, the FX market is still working on getting cash flow from Mexico, Canada and China – and that could prevent the dollar from correcting too much this week.”
The prospect of high prices in goods from countries including China, Canada, Mexico, and the Eurozone, have been worried by concerns about renewed inflation, increasing the US dollar in recent months.
Stocks ended the latest two-day setup session on Wednesday, and are expected to keep interest rates unchanged.
Euro lower ahead of ECB meeting
In Europe, it gained 0.1% to 1.0489 after German business sentiment was unexpectedly improved in January due to a positive assessment of the current economic situation, a survey showed on Monday.
The IFO Institute said it rose to 85.1 in January from 84.7 last month, while current targets showed it to 86.1 in January from 85.1 in December.
This added to the Eurozone’s job data for the previous week in January, suggests that the eurozone economy is improving slightly.
However, it is expected to cut interest rates again at the next meeting.
Traders are looking for further clues from the ECB chief who could move the needle on the further cuts they expect this year after he left on Thursday.
“Expect EUR/USD to be contained in the near term range of 1.0400-1.0500, with the next catalysts being the FOMC and ECB meetings respectively,” it added.
It traded 0.1% lower to 1.2460, showing signs of weakness ahead of the next meeting in early February.
“We think there is a good case for GBP/USD to be able to trade at 1.19/20 later this year as the Bank of England picks up the pace of its additional cycle and the chancellor may need to return to the table with monetary tightening later this year,” it added.
Yuan slips after weak PMI data
In Asia, it traded 0.6% lower to 154.76, with the yen benefiting from the Bank of Japan’s interest rate hikes last week.
The Central Bank has also indicated that it plans to increase the rates if it meets the expected economic outlook in the coming months.
DEADED 0.2% higher to 7.2603, after the unexpected Chinese contract in January, as the latest stimulus measures from Beijing provided only short-term support to local businesses.
At the same time, growth slows down and slows significantly during the month, and local businesses face uncertainty due to high trading power.
