The U.S. Dollar is Retreating Ahead of the ECB Meeting
23.01.2024, 10:23

The U.S. Dollar is Retreating Ahead of the ECB Meeting

The U.S. Dollar is showing slight weakness this week, as the U.S. Dollar Index (DXY) dropped by 0.2% to 103.07 points. The EURUSD also experienced a marginal decline of 0.1% to 1.08870. Taking a broader perspective, the pair has been rising from last week's lows at 1.08450, indicating a potential retreat of the Greenback.

The currency movements appear to be less grounded in fundamental logic. Traders are reassessing aggressive bets on interest rate cuts by both the Federal Reserve (Fed) and the European Central Bank (ECB). Bets on a Fed interest rate cut in March decreased to 42.4% from 73.0% the previous week, suggesting a more cautious approach with interest rates remaining at 5.50% until the May Fed meeting.

Despite these considerations, the Dollar has seen only a modest 0.4% rise since the strong U.S. labor market report for December. Larger investors seem hesitant to strongly bet on a rising Dollar, as evidenced by the capital inflows of $6.4 million into the WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU) during the last two weeks, while net overall outflows were recorded at $24.0 million since the beginning of 2024.

The debt market has had a subdued reaction to these developments, with U.S. 10-year Treasuries yields increasing to 4.13% from 4.00%. Some major players may still be anticipating more aggressive rate cuts by the Fed.

Rumors about China's government moving around $278 billion to support the domestic stock market through offshore entities caused the Hang Seng index to rise by 2.6%. The Yuan also gained 0.4% against the Dollar, prompting the EURUSD to move up towards 1.09500-1.09700. However, these moves are likely to be influenced by the ECB meeting and the release of the Fed's preferred PCE index later in the week. The rhetoric from European central bankers and potential changes in expectations regarding interest rate cuts may impact currency movements. The EURUSD could find upside momentum if central bankers downplay the prospects of aggressive rate cuts. Analysts are expecting the PCE Index to remain at 2.6% YoY in December, with a slight increase in the monthly reading to 0.2% from -0.1% in November, presenting a relatively neutral outlook for the Dollar.

  • Name: Sergey Rodler
Symbol Bid Ask Time

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at

Live Chat E-mail
Choose your language / location