FOREX

The US dollar is losing ground to other major currencies during early Tuesday trading, erasing most of the previous session’s gains. The performance of the greenback has, to a large extent, been determined by market expectations over the pace and scope of the Federal reserve’s tightening cycle. As we approach this Wednesday’s rate decision, it is widely assumed that the Fed will hike rates by 75 basis points. With that scenario already priced in, the focus is now on the tone used by Jerome Powell, when he speaks after tomorrow’s rate announcement. Investors will be looking for hints of a pivot in monetary policy, and today’s losses already reflect such expectations. The US economy has recently showed some signs of weakness, and pressure has been mounting for the central bank to take the foot of the monetary tightening accelerator, with growing concerns that its determination to curb inflation will end up breaking the economy.

Ricardo Evangelista – Senior Analyst, ActivTrades               

Source: ActivTrader

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