The US dollar fell in the European market on Monday against a basket of global currencies, resuming its losses that stopped in the previous session, on its way again towards testing the lowest level in four months.
The selling of the US currency was renewed in light of the currently strong possibilities that the Federal Reserve will ease monetary policy and reduce interest rates starting from the March 2024 meeting.
US dollar index
Dollar index contracts declined by 0.2% to the level of 102.38 points, from the opening level of today’s trading at 102.59 points, and recorded the highest level at 102.63 points.
On Friday, the index achieved an increase of 0.6%, the first gain in the last four days, after recording the previous day the lowest level in four months at 101.77 points.
Last week, the US dollar index lost 1.35%, the fourth loss in the last five weeks, due to the broad decline in US bond yields following the Federal Reserve meeting.
Federal Reserve Chairman Jerome Powell said last week that the historic tightening of monetary policy in the United States has ended, and that policymakers are now discussing the possibility of lowering interest rates in 2024.
The US Central Bank adjusted the target interest rate during the quarterly economic forecasts report during the current year to 5.50% from 5.75% in September expectations, the target interest rate during 2024 to 4.75% from 5.25%, and the target interest rate during 2025 to 3.75% from 4.0. % in previous forecasts.
The above point means that the Federal Reserve currently expects cuts of at least 75 basis points over the next year (2024), which was previously unlikely to happen according to most forecasts.
American interest
Futures pricing for the probability of a 25 basis point cut in US interest rates during the March meeting is currently stable at 75%, and futures for the probability of a cut during the May meeting is at 97%.
In order to re-price these contracts, investors are awaiting, at successive times this week, the release of gross domestic product data in the United States, unemployment claims, and personal consumption expenditures.
