Investing.com – The dollar was up on Tuesday morning in Asia but remained near multi-week lows as U.S. Treasury yields fell and investors consolidated positions ahead of the U.S. Federal Reserve’s latest policy decision.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.14% to 90.907 by 12:39 AM ET (4:39 AM GMT). The index was little changed at 90.859 as the Asian session opened, after falling to 90.679, its lowest level since Mar. 3, during the previous session.
The USD/JPY pair edged up 0.15% to 108.25, with the dollar inching up 0.1% and continuing its rise from Friday’s seven-week low of 107.48. The Bank of Japan also kept its interest rate unchanged at 0.10% when it handed down its policy decision earlier in the day, in line with investor expectations.
The AUD/USD pair edged down 0.12% to 0.7790, after the riskier, commodity-linked AUD rallied 0.7%, just shy of a five-week high, during the previous session. Across the Tasman Sea, the NZD/USD pair edged down 0.14% to 0.7224.
The USD/CNY pair inched up 0.03% to 6.4863, with the offshore Chinese yuan inching down 0.1% after its rise to a seven-week high of 6.4710 per dollar on Monday.
The GBP/USD pair inched down 0.06% to 1.3888.
The euro slipped 0.1% to $1.2078 but remained near the one-month high of $1.2117 hit on Monday.
Some investors remained bearish on the dollar, however.
“The dollar doesn’t seem to have the strength it had earlier this year… it had been driven by various expectations, such as massive fiscal spending and speedy vaccinations in the U.S. Most of those appear to have been priced in,” Ryobi Systems chief of financial Kyosuke Suzuki told Reuters.
Investors now await the Fed’s decision, due on Wednesday, and will pay particular attention to comments from Chairman Jerome Powell, who will likely face questions on whether the improved economic outlook warrants a withdrawal of monetary easing by the central bank.
However, some investors expect Powell to dismiss such talk, which could potentially put further downward pressure on Treasury yields and the dollar.
“The reflation trade is back on… currencies outside of the dollar should be doing quite well anyway in that environment,” National Australia Bank (OTC:NABZY) strategist Gavin Friend told Reuters.
The dollar has fallen nearly 3% since late March 2021, as U.S. Treasury yields remain boxed in narrow ranges after retreating from their 14-month high of 1.7760%. The benchmark 10-year U.S. Treasury yield hovered near 1.58% on Tuesday.
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