US Dollar Steady as Markets Await ECB Policy Decision

US Dollar Steady as Markets Await ECB Policy Decision

Posted Tuesday, September 8, 2020 by
Arslan Butt • 1 min read

The US dollar is trading steady on Tuesday, managing to hold on to gains from the previous session as investor focus shifts towards the Euro in anticipation of the upcoming ECB meeting later this week. At the time of writing, the US dollar index DXY is trading around 93.17.

Despite the US markets being closed for Labor Day on Monday, the dollar managed to strengthen by 0.2% against other leading currencies. However, gains remain limited as a result of an improvement in the markets’ risk appetite, sending investors away from the safety of currency markets and towards equities.

The ECB’s policy decision due on Thursday could cause some moves in the US dollar even though the central bank is expected to keep its policy unchanged. However, ECB chief economist Philip Lane had alluded to the possibility of intervention after [[IEUR/USD]] rose above 1.20 earlier this month.

In case the ECB turns more dovish than expected, the US dollar could turn bullish and make more gains, sending the Euro lower. Meanwhile, commodity currencies like the AUD and NZD strengthened a little against the dollar after weakening in the previous session over the possibility of negative interest rates.

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