Investing.com – The US dollar weakened on Wednesday, adding to the previous session’s losses, with the euro benefiting despite signs of economic weakness in the eurozone.
At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 100.080, after falling more than 0.5% in the previous session, its largest currency: daily percentage falls in a month.
The dollar continues to fall
The US dollar struggled to make friends after starting its rate cutting cycle earlier this month with a big cut of 50 basis points.
Data on Tuesday showed the US fell unexpectedly in September, raising concerns about further growth in the world’s largest economy, especially as the labor market shows signs of contraction.
“In a surprise move yesterday, US consumer confidence was much weaker than expected,” ING analysts said in a note. “The market is very sensitive to this theme because the American consumer has been so resilient for so long.”
Markets are now pricing in a 59.5% chance of a 50 basis point rate cut at the Fed’s next policy meeting, up from just 37% a week ago, according to CME’s FedWatch tool.
Euro near 13-month high
In Europe, it traded 0.1% higher at 1.1188 and hovered around a 13-month high last month, with the euro benefiting from dollar weakness despite data pointing to economic weakness in the eurozone.
“There is very little on the European calendar today, so trading in the EUR/USD range seems likely. But the fact that EUR/USD remains above 1.1100 is encouraging for modest EUR/USD bulls like us,” ING said.
traded 0.1% lower at 1.3394, down from levels not seen since March 2022.
Sterling has received support as it is widely believed that the Bank of England is unlikely to be as aggressive with its interest rate cuts this year as the Federal Reserve.
Megan Greene of the Bank of England will speak later in the session, and her comments will be examined for further clues on the timing of the British central bank’s monetary easing.
rose 0.1% to 10.1041, ahead of the latest policy-setting meeting of the Swedish .
The central bank is widely expected to cut rates by 25 basis points later in the day, but Riksbank Governor Erik Thedeen has not dismissed the possibility of half a point.
Yuan near record levels
traded 0.1% lower at 7.0238, falling close to the lowest level since May 2023, after Beijing announced a slew of stimulus measures on Tuesday, including a cut in banks’ reserve requirements and lower mortgage rates.
rose 0.4% to 143.81, while down 0.2% to 0.6878, just below a 19-month high after a sharp rally in the previous session.
Data released on Wednesday showed inflation fell to a three-year low in August, while the decline in core inflation was less pronounced.
Interest rates held steady on Tuesday, saying that while inflation was expected to fall in the near term, they only expected price pressures to sustainably reach their target range in 2026.
