Investing.com – The U.S. dollar fell on Wednesday, retreating from hitting a four-week high ahead of the end of the latest Federal Reserve meeting.
At 04:10 ET (0810 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.4% lower at 104.775, after hitting its highest level since 14 overnight. May at 105.46.
The dollar awaits the Fed meeting
The dollar has fallen from recent highs, but the US currency is in demand after a stronger-than-expected performance on Friday as traders trimmed bets that the Federal Reserve will cut rates this year.
With that in mind, all eyes will be on the release of key US data and the meeting, including fresh interest rate forecasts later on Wednesday.
The May consumer price index is expected to rise just 0.1% from the previous month, for annual growth of 3.4%, still well above the Fed’s medium-term target of 2%.
The US central bank is not expected to change interest rates this time, and traders will be watching to see whether Fed officials change their expectations for the number of interest rate cuts this year.
“Markets can move two things. If the Fed removes from its statement the phrase “There has been no further progress towards the Committee’s 2 percent inflation target in recent months,” short-term US bond yields and the dollar could fall, ING analysts said in a statement. note.
“Additionally, Chairman Powell usually gives a conciliatory press conference, and the dollar that day has been down for the last four consecutive FOMC meetings. The same thing could happen today.”
The UK economy failed to grow in April
rose 0.1% to 1.2750, with sterling rising despite data showing the British economy failed to grow in April, largely due to wet weather.
unchanged in April after rising 0.4% month-on-month in March.
The figures follow Tuesday’s labor market data, which showed employment falling and unemployment rising but wages continued to rise strongly.
rose 0.1% to 1.0745 after data confirmed German inflation rose in May due to rising service prices.
harmonized with other European Union countries rose 2.8% in May from a year earlier, up from the 2.4% year-on-year growth seen in April.
“We think the EUR/USD pair may find some support from today’s events in the US. However, the 1.0800 level is now likely to become strong intraday resistance,” ING added.
Japan’s Producer Price Index does little to support the yen
In Asia, trading rose 0.1% to 157.26, with the yen receiving slight support from hotter-than-expected data released shortly before this week’s meeting.
The Bank of Japan meets on Friday and is likely to keep rates unchanged. But the central bank is also expected to tighten policy further by slowing the pace of bond purchases.
fell slightly to 7.2538, remaining near a six-month high after mixed inflation data in China raised concerns about the country’s economic recovery.
Although the economy contracted at its slowest pace in 15 months in May, it grew less than expected, barely staying out of contraction territory.