On Friday, July 23, USD jumped following the dovish stance of the European Central Bank at its latest policy meeting last Thursday. Now, the attention is set to the U.S. Federal Reserve, which will hold its policy meeting next week.
The Dollar Index, which trails the greenback in opposition to its six other rival currencies, increased 0.05% to 92.880. It had a weekly gain of 0.10% despite making a small move overnight. The uptrend in the USD benchmark showed tentative signs of stalling around 93.0.
However, an analyst stated that its overall resilience is suggesting retracements that will likely be limited to the 91.5 to 92.0 range. It is regardless of the shift in risk mood and the European Union Central Bank’s shift to a more structurally dovish posture.
Nonetheless, it declined from its three-and-a-half-month high of 93.194 hits last Wednesday as investors regained some of the lost confidence as the Covid-19 cases continued to rise globally.
The USD/JPY pair advanced 0.10% to 110.25 as Japan’s markets were closed yesterday due to a national holiday, with the Tokyo Olympics starting today.
Likewise, the USD/CNY and GBP/USD inched up 0.04% to 6.4722 and 0.01% to 0.3761, respectively.
Consequently, the NZD/USD pair climbed 0.21% to 0.6978 while the AUD/USD plummeted 0.01% to 0.7377, which is its fourth consecutive weekly decline.
Australia tightened its current lockdown in Sydney as it reported a daily rise in coronavirus infections. This prompted speculations that the Reserve Bank of Australia might increase its stimulus rather than decrease it at its next policy meeting.
ECB Policy Meeting
Last Thursday, the ECB had its policy meeting, where it pledged to maintain its dovish monetary policy, which is already widely expected. After the decision, the euro subsided 0.20% lower at $1.1779, and now the EUR/USD pair increased 0.10% to 1.1782.
Moreover, some investors’ eyes are on the Bank of Russia, which will have a meeting later in the day. They expect it to lift its benchmark interest rate as it has a hard time fighting the rising inflation.
This year, the central bank has already increased its rating by 125 basis points. However, it still has annual inflation of 6.50% at a five-year high, which is above its 4.00% goal.
Moreover, the CHF/USD and the CAD/USD declined 0.04% to 1.0877 and 0.01 to 0.7957, respectively. While the SEK/USD traded flat at 0.1153.