NEW YORK: The dollar edged lower on Thursday against the euro as investors weighed the outlook for US Federal Reserve policy against the chances that higher interest rates could lead to a recession.
The Fed, the European Central Bank and the Bank of England are all set to announce interest rate decisions next week as policy makers continue to tap the brakes on economic growth through higher rates to thwart stubbornly high inflation. Traders and investors will be on the watch for any signs that the Fed is getting ready to pause its hikes.
“A lot of the recent weakness in the dollar is because we’re getting close to the end of the tightening cycle and exactly when they pause and how long they pause will determine what the dollar does,” said Ed Moya, senior market analyst at Oanda.
“For now it seems that investors are positioning themselves for a little bit of dollar weakness, but there are still a lot of global risks on the table, so we are not going to see this be a one-way move lower for the dollar,” he said.
The dollar was down 0.37% at $1.05435 against the euro at 9:45 a.m. EST (1545 GMT), and up 0.13% at $1.2228 versus the pound.
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