The US dollar continues to trade cautious against its major peers into today ahead of the upcoming Fed meeting which is scheduled to start today and go on into Wednesday. At the time of writing, the US dollar index DXY is trading around 96.71.

The safe haven currency Japanese yen made strong gains against the dollar in anticipation of the US central bank adopting an even more dovish stance at its next meeting and possibly expanding the scope of its bond purchase program. Meanwhile, commodity currencies like the AUD and NZD are trading steady as the Australian and New Zealand economies reopen after several weeks of lockdown and focus on recovery.

The US dollar has also weakened as its safe haven appeal diminished following the release of a better than expected employment report from the US for the month of May. This has raised hopes that economic recovery has stated and could be sharp as states emerge out of the lockdown and get back to work.

This sentiment has also helped fuel a rally in stock markets as traders focus on economic recovery and expect a sharp, V-shaped improvement in economic conditions as countries lift lockdown restrictions. A decline in fresh cases across the US, especially in New York, has also helped support the risk appetite in markets and weakened the US dollar.