Dollar Gains Slightly, Markets Shift to Risk Ahead of Central Bank Decisions
The US dollar moved more subdued on Wednesday after weaker oil prices bolstered risk appetite in the market ahead of a series of major central bank decisions. However, the greenback remains seen as a prominent hedge amid the Middle East crisis, which is entering its third week.
The dollar index edged up 0.06% to 99.61 after two days of declines. The euro fell 0.05% to US$1.1532, having strengthened in the previous two sessions, as markets awaited the start of the two-day European Central Bank (ECB) meeting.
The yen remained fragile in an area that previously raised concerns about Tokyo intervention. The yen weakened slightly by 0.01% to 159.00 per dollar, ahead of Japanese Prime Minister Sanae Takaichi's scheduled departure for a meeting with US President Donald Trump in Washington.
Subdued oil prices also curbed the dollar's gains, following a report citing American Petroleum Institute (API) data showing an increase in US crude oil inventories. Analysts believe the pause in oil prices provides room for a recovery in sentiment across assets, although geopolitical risks have not abated.
Market focus is on the Federal Reserve's interest rate decision on Wednesday, followed by the ECB, Bank of England, and Bank of Japan the following day, which are widely expected to keep rates unchanged. Market participants will be closely monitoring comments on inflation and the economic outlook amid uncertainty stemming from the US-Israel war with Iran, while expectations of the Fed's easing this year have dwindled to around 25 basis points.
Elsewhere in the market, sterling remained relatively stable at US$1.3355, while the Australian dollar strengthened 0.1% to US$0.7109 and the New Zealand dollar rose 0.05% to US$0.586. Shifting policy expectations are also evident in Europe, with markets now pricing in more than one ECB interest rate hike in 2026, reversing the chance of a cut that was previously expected before the conflict escalated. (asd)
Source: Newsmaker.id
