Investing.com – The U.S. dollar was lower in European deals on Tuesday, despite limited volatility following the turmoil caused by central bank meetings last week and ahead of the release of key inflation data later this week.
At 6:10 a.m. ET (1010 GMT), the dollar index, which tracks the dollar against a basket of six other currencies, was trading 0.2% lower at 103.760, suffering from a minor bout of profit-taking after hitting a monthly high last year. a week.
The dollar is consolidating
The dollar showed some consolidation early in the week, trading in tight ranges amid a general calm following last week’s central bank meetings and ahead of the release of the Federal Reserve’s favorite inflation gauge this Friday.
“We considered last week’s dollar rally to be exaggerated given the Federal Reserve’s relatively dovish message, and we are not surprised to see the dollar weaken earlier this week,” ING analysts said in a note.
More economic data will be released on Tuesday, including data for March, February and .
However, trading ranges are unlikely to widen significantly ahead of the Fed’s preferred inflation measure, due when markets close on Good Friday.
Last week, the Fed stood by its forecast of three interest rate cuts this year, but added that it needed more evidence of slowing inflation before it starts to decline.
Sterling and Euro are recovering slightly
In Europe, the index rose 0.2% to 1.0854, helped by slight dollar weakness even as European Central Bank officials hinted at rate cuts starting in the summer.
The slow recovery is expected to continue in April as the consumer sentiment index, published jointly by GfK and the Nuremberg Institute for Market Solutions, rose slightly in April to -27.4 from a revised -28.8 in March.
German consumer sentiment is expected to remain on track for a slow recovery in April, helped by fewer households recognizing the need to save, even as uncertainty remains high over Germany’s economic development, a survey showed on Tuesday.
The consumer sentiment index, published jointly by GfK and the Nuremberg Institute for Market Solutions, rose slightly in April to -27.4 from a revised -28.8 in March.
“European Central Bank doves continue to repeat the message that consensus in the Governing Council is shifting towards imminent easing,” ING added.
“This week, EUR/USD could avoid much more pressure on the 1.0800 support and stabilize around 1.0850 or slightly above.”
rose 0.2% to 1.2656, bouncing off last week’s one-month low after the Bank of England governor told the Financial Times that rate cuts were “in play” this year.
Yen remains weak
traded 0.1% lower at 151.29, with the pair remaining close to its highest level in four months.
The recent weakening of the yen, which came despite the Bank of Japan’s first rate hike in 17 years, has heightened warnings of possible intervention from the Japanese government. The warnings, particularly comments from leading Japanese currency diplomat Masato Kanda, led to the yen stabilizing.
The focus now turned to the upcoming episode, which is set to take place later this week.
rose 0.1% to 7.2186, rising to its highest level since mid-November and well above the psychologically important 7.2 level.
The yuan’s recent losses were driven by worsening sentiment about China’s economic recovery, while the PBOC also flagged further potential interest rate cuts to provide stimulus. Both factors bode poorly for the yuan, which has been one of the worst-performing Asian currencies over the past two years.