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US Dollar Edges Lower Against Euro as Traders Remain Reluctant

January 25, 2017 at 17:11 by Yahia Barakah

Benjamin Franklin's portrait on a hundred-dollar billThe US dollar edged slightly lower against the euro on Wednesday, as a sentiment of reluctance remained dominant between currency traders. Continued uncertainty towards the economic plans of US President Donald Trump prevented the nation’s currency from maintaining its recent rally.

The uncertainty stemmed from Trump’s protectionist scheme for the US economy, which could harm US trade and might have its negative effect on economic growth. The US president started off his presidency last Monday by signing an executive order that officially withdraws the United States from the Trans-Pacific Partnership.

The negative sentiment is weighing down on traders’ optimism toward a rally the dollar might enjoy as inflation rises under Trump’s administration. The president, who promised to increase infrastructure spending and cut corporate taxes, will presumably have a positive effect on inflation. Higher inflation backs the Federal Reserve’s case of raising interest rates, which supports the dollar higher.

Traders will be waiting further signals from Trump on what campaign promises he made will be brought to reality, and at what pace. Recent comments from the president criticizing the strength of the dollar left the market with conflicting views on his future views. A lack of important data releases today added to the absence of a trend for the US currency.

EUR/USD traded at 1.0750 as of 16:50 GMT on Wednesday, from 1.0763 at 12:20 GMT, the pair’s highest level today. EUR/USD kicked off the day at 1.0723.

GBP/USD rose to 1.2624, pair’s strongest level since December 14, from 1.2526 at the beginning of the day.

The Dollar Index, which measures the strength of the US currency against a basket of its major peers, hovered at 100.01 as of 16:45, from 100.35 on Tuesday.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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