US Dollar’s Appeal Dented by Hawkish BOE and ECB

The US dollar is exhibiting some signs of bearishness, trading under pressure after the BOE and ECB lent markets more hawkish tones than they were anticipating and surprising investors worldwide, helping majors Euro and Sterling to gain some strength. At the time of writing, the US dollar index DXY is trading at around 96.02.

Over the past two sessions, the dollar index has lost around 0.61% of its value, and extends its downslide into Friday’s Asian session as well. On the other hand, GBP/USD edged up to the highest levels seen since late November after the BOE announced its first rate hike since the beginning of the pandemic.

In doing so, the BOE went on to become the first among the major central banks to execute an increase in interest rates. Investors had reduced the likelihood of such a rate hike in the wake of rising infections from the Omicron variant across Britain, so the hawkish tones took markets by surprise and drove bullish moves in the Sterling as a result.

The common currency was also helped higher in the previous session after the ECB also sounded more optimistic about the Eurozone economy, laying out plans for cutting down on monetary stimulus in the coming quarters. The European Central Bank has decided to end its emergency bond purchases by March 2022 and is planning to hike its asset purchases instead to offer support to the economy.

Analysts expect the weakness in the US dollar on account of the BOE and ECB decisions to stay for some time. However, they anticipate investors to use the opportunity to buy into the greenback instead, keeping it supported and preventing too much bearishness against most of the leading currencies.

ABOUT THE AUTHOR See More

Aiswarya Gopan

Financial Writer & Editor - Asia & Europe Desk

Aiswarya Gopan is a financial journalist, editor, and content strategist with more than 19 years of experience across financial markets, fintech, blockchain, and technology. She has worked with leading cryptocurrency exchanges, including BingX and KuCoin, driving content strategy, market research, and editorial initiatives covering digital assets, DeFi, Web3, and global financial markets. Drawing on a background in cybersecurity, technology journalism, and market research, Aiswarya specializes in translating complex financial and blockchain developments into clear, timely insights. At FX Leaders, she covers cryptocurrency, stocks, forex, and macroeconomic developments across the Asian and European trading sessions.

Dollar Index Hammers Gold, Triggers Fund Selling

2 weeks ago

Save

Forex Signals Dec 18: Nike and FedEx Earnings Preview, Lead ECB and BoE Rate Decisions

7 months ago

Save

U.S Dollar Unshaken After Powell’s Cautious Outlook

10 months ago

Save