The US Dollar is seen weakening ahead of the Federal Reserve's (FED) monthly meeting which will take place in the middle of this week. The dollar is weak as market sentiment is currently recovering as the current global economic situation is seen to be improving.
The Dollar Index, which tracked the change in the value of the US Dollar against 6 other major world currencies, was seen declining slightly to 0.1%, trading at 90.77. The decline of the Dollar index graph was also followed by several pairs involving the US Dollar such as USD/JPY, EUR/USD, GBP/USD and AUD/USD.
The USD/JPY pair traded lower, down 0.1% and is currently at around 107.81. Meanwhile, the EUR/USD pair jumped 0.1% and is currently trading at 1.2100, approaching its highest level in the last 2 months.
The same situation is also seen in the GBP/USD and AUD/USD pairs where these two pairs give an indication of the weakness of the US Dollar this month when each recorded an increase of 0.3% and was at the level of 1.3914 (GBP/USD) and 0.7769 (AUD/USD).
This week's focus will definitely be on the FED meeting which will take place on April 29, 2021 where the FED will determine their current monetary policy based on the current economic situation. FED Chairman Jerome Powell will face questions such as the recovery of the employment sector and the resurgence of the Covid-19 pandemic and the steps the FED will take in dealing with this situation.
Nordea analysts, expect no monetary policy changes to take place this week. It is expected that the FED will continue to stick to its existing monetary policies and strategies. Nordea expects the USD to appreciate by the third quarter of 2021, and expects monetary policy changes to take place only in September.