HomeFinancial MarketsDollar Remains Rooted to Seven-Month Low as Euro and Yen Gain Ground

Dollar Remains Rooted to Seven-Month Low as Euro and Yen Gain Ground

The U.S. dollar fell to a seven-month low against a basket of major currencies on Monday while the euro and the Japanese yen appear to be strengthening. Investors are now awaiting the Bank of Japan’s latest moves with regard to its yield control policy.

While the Australian dollar hit $0.7000 for the first time since August, the euro hit a nine-month high of $1.0874 during early trading. The dollar index, which tracks the dollar against a basket of major currencies, fell to a seven-month low of 101.77. The greenback extended its major selloff from last week after U.S. consumer prices fell for the first time in over two and a half years.

The dollar’s decline has also been largely attributed to growing investor confidence that the Federal Reserve will soon bring an end to its aggressive interest rate policy. The Federal Reserve’s significant interest rate hikes are viewed as a major driver for the dollar’s 8% surge in 2022.

Samy Chaar, the chief economist at Lombard Odier, cautioned against overly-optimistic investor outlooks. “It’s too soon to imagine a significant dollar downtrend, we’ve had some dollar repricing certainly, but for broad-based dollar weakness you’ll need to really see Fed expectations roll over materially and the Fed potentially cutting rates at some point, and we are not at this point,” Chaar explained.

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