September 30, 2021

USD Takes A Break From Continuing Climb, Investors Start To Be Cautious?

 The greenback cut gains over its main rivals, but remained traded around one -year highs with strong support from investor optimism as the Federal Reserve (Fed) initiated a stimulus reduction.

At the time of writing, the dollar index was slightly down at 94.28 against six other major currencies.

The safe-haven U.S. dollar has posted big gains this week following a recorded rise in U.S. bond yields as expectations for the central bank implementing policy tightening are mounting.

Pressure from the surge in global energy prices also gave support for the greenback and bond yields to rise higher.

Speaking at a European Central Bank (ECB) forum on Wednesday, Chairman Jerome Powell, President Christine Lagarde and Central Bank of England (BOE) Governor Andrew Bailey said they would monitor inflation following rising energy prices and reduced production.

The risk -sensitive Aussie dollar halted gains in the Asian session following support from rising iron ore prices, Australia’s main export.

The euro continued to trade gloomily at its lowest level since July 2020, around 1.1600 against the greenback dollar.

Investors are now more cautious as trading sessions head into the weekends and months, which will typically see profit-taking in the market.