Dollar Climbs as Previous Weakness Subsides

NEW YORK: The US dollar experienced a resurgence on Thursday, recovering from its recent decline against other major currencies. This uptick occurred as the euro saw a slight dip following the European Central Bank’s decision to lower rates for the seventh time this year.

This week, the US dollar has demonstrated increased stability, trading within a narrow range against the euro. This stability follows significant drops the previous week, which were fueled by worries regarding the economic repercussions of tariffs and investors reallocating their funds to foreign markets.

An FX strategist at Scotiabank, Eric Theoret, noted, “We’ve seen considerable strength in most of the G10 currencies recently, and it seems we are currently in a period of consolidation. Our long-term outlook for the US dollar remains bearish, so we view this as a temporary pause.”

Market participants are keenly observing discussions between the United States and its trading partners, seeking indications of potential agreements that might clarify the objectives of the current administration.

On Wednesday, there were claims of “significant progress” in tariff negotiations with Japan, and a subsequent social media post asserted that “Every Nation, including China, wants to meet!”

Italian Prime Minister Giorgia Meloni is scheduled to meet with US officials to address tariffs imposed on the European Union, while the US Treasury Secretary has extended an invitation to South Korea’s finance minister for discussions in Washington next week.

The ECB’s rate cut brought interest rates to their lowest level since late 2022, intending to bolster the struggling Eurozone economy, which is expected to be significantly impacted by US tariffs.

Kirstine Kundby-Nielsen, an FX analyst at Danske Bank, commented, “The tone is dovish, with the focus shifting towards downside risks to growth rather than upside risks to inflation.”

US Federal Reserve Chair Jerome Powell stated on Wednesday that the Fed would await further economic data before altering interest rates. However, he cautioned that the administration’s tariff policies could potentially steer inflation and employment further away from the central bank’s objectives.

The euro declined by 0.35% to $1.1358, remaining below the three-year high of $1.1473 recorded on Friday. The dollar rose by 0.3% against the Japanese yen, reaching 142.24. Earlier, it had touched 141.60, its lowest point since September 18.

Trading volumes are anticipated to decrease leading up to Good Friday, when most US markets will be closed, although foreign exchange markets will remain operational.

The dollar strengthened by 0.55% against the Swiss franc, reaching 0.817.

The New Zealand dollar increased by 0.51% to $0.5964 after data revealed that New Zealand consumer prices had risen more rapidly than expected in the first quarter.

The Australian dollar appreciated by 0.22% to $0.6383, following reports of a rebound in Australian employment in March. Sterling was last up 0.07% at $1.3249.

In the cryptocurrency market, Bitcoin saw an increase of 0.29%, reaching $84,540.