The U.S. dollar rose against the euro on Wednesday a day after touching a more than one-year low, but it hit a more than three-week low against the yen as traders awaited meetings of the European Central Bank and the Bank of Japan.
Market watchers will be looking to see if the recent strength of the euro and the yen influence policy outlooks from the European and Japanese central banks.
The ECB meets on Thursday and is expected to adjust its language as it gets closer to normalizing policy. That may include dropping a reference to its readiness to extend or expand its bond-buying program.
Analysts, however, said the central bank would likely delay significant details on its plans to taper its asset-purchase program until September. The expectation of a tight-lipped ECB weighed on the euro.
The euro was last at $1.1517
"Most sensible commentary is rightly pointing out it’s doubtful Draghi will deliver anything tangible in terms of a tapering tomorrow," said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York, referring to ECB President Mario Draghi.
The dollar index, which measures the greenback against a basket of six rival currencies, was last up 0.2 percent at 94.791, not far from the more than 10-month low struck Tuesday of 94.476 <.dxy>.
The dollar index remained near Tuesday`s lows after Republicans failed late on Monday to pass a healthcare bill, raising doubts about President Donald Trump`s agenda, and as markets have begun to doubt the Federal Reserve`s ability to hike interest rates again this year given weak U.S. economic readings.
The dollar was down 0.2 percent against the yen
"FX investors had a very substantial long dollar/yen position," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York. "I think they’re just squaring up ahead of the BoJ," he said.
"There’s always risk" surrounding the central bank`s possible signals, Anderson said.
The Bank of Japan began a two-day policy meeting on Wednesday.
Under Governor Haruhiko Kuroda, the BOJ in 2013 adopted an aggressive stimulus program with the aim to lift inflation to 2 percent in about two years and pull Japan out of prolonged deflation.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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