Anna 
On Tuesday, the dollar experienced a slight downturn, maintaining narrow trading ranges against its counterparts, as investors awaited crucial inflation figures from major economies this week, poised to shape the global interest rate landscape.
Notably, the greenback was teetering on the brink of its inaugural monthly decline for 2024, a trend potentially signaling further weakness ahead, according to Athanasios Vamvakidis, BofA’s global head of forex strategy. Vamvakidis attributed the dollar’s deceleration to lackluster U.S. economic data juxtaposed with unexpectedly robust figures from the eurozone, along with the Federal Reserve’s resistance against speculation regarding potential rate hikes.
Against a basket of currencies, the dollar dipped by 0.11% to 104.44, tallying a monthly drop of 1.7%.
Meanwhile, the euro managed to advance by 0.16% to $1.0876, defying bearish sentiments following dovish remarks from European Central Bank (ECB) policymakers and stagnant German business morale data. ECB’s Francois Villeroy de Galhau further reinforced market expectations of an impending rate cut next week, albeit revisions in investors’ projections for future ECB actions have been noted.
Market attention remains riveted on upcoming German and eurozone inflation data, alongside the eagerly anticipated U.S. core personal consumption expenditures (PCE) price index report scheduled for release on Friday. The market is anticipated to react strongly to any deviations from expected benign numbers, potentially spurring significant movements in U.S. yields and the dollar’s trajectory.
Amidst these developments, the yen hovered near 157 per dollar, with analysts observing potential scenarios of yen strengthening against the greenback contingent on the Fed’s rate cut timelines. However, divergent expectations regarding Fed policy adjustments could induce volatility in yen-dollar exchange rates, influencing potential interventions by Japanese authorities.
Elsewhere, sterling and the New Zealand dollar surged to over two-month highs, while the Aussie dollar saw a modest uptick. Cryptocurrencies displayed mixed performance, with bitcoin sliding 2.6% to $67,778 and ether declining 0.9% to $3,853.50.
As market participants await key data releases and monitor central bank policy outlooks, currency movements are poised to be influenced by evolving economic narratives and shifting market sentiments in the days ahead.
