The dollar continues to retreat from its highest level in 20 years after the expectations of the Federal Reserve to raise interest rates to half a point today and the currency markets are awaiting.
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The dollar continues to decline from its highest level in 20 years
Today, Wednesday, the dollar index continued to retreat from its highest level in 20 years, after it had already absorbed expectations that the Federal Reserve would raise interest rates by half a point later in the day and about 250 basis points by the end of the year.
The currency markets are awaiting the US Central Bank’s announcement at 18:00 GMT, and a press conference for its president, Jerome Powell, after witnessing highly volatile transactions in the past few weeks, during which the dollar jumped to a 20-year high against a basket of competing currencies.
Money markets are betting that the US central bank will raise the interest rate to 3.6% by the end of 2023, to curb inflation, which has reached its highest level in 40 years.
Having already started its rate-raising cycle in March, the bank is expected to raise it by 50 basis points on Wednesday, in addition to two more similar increases in the next two meetings.
Those bets raised the dollar index last month by 5% to 103.93, but it has since fallen 0.3% from those levels. By 08:30 GMT, it recorded 103.39, which is a slight decrease during the day.
The dollar’s strength had pressured other currencies and pushed the euro last week to a two-decade low near $1.0469, as the euro was traded on Wednesday at $1.0512.