Dollar set for weekly loss on Ukraine peace talks, tariffs delay; euro in demand
The U.S. dollar is poised for a significant weekly decline, influenced by ongoing Ukraine peace negotiations and a delay in the implementation of proposed reciprocal tariffs by President Donald Trump. The Dollar Index, which measures the greenback against a basket of six major currencies, has decreased by approximately 1% this week, reaching a three-week low of 106.815.
President Trump has instructed officials to develop plans for reciprocal tariffs on nations that impose taxes on U.S. imports. However, the absence of an immediate implementation has led traders to anticipate potential negotiations, resulting in a depreciation of the U.S. currency.
Concurrently, Western leaders are convening in Munich to explore avenues for peace in Ukraine. Speculation is mounting about possible meetings involving representatives from the U.S., Russia, Ukraine, and Europe, potentially in Saudi Arabia. This diplomatic momentum has further contributed to the dollar's softness.
In Europe, the euro has risen to a two-week high against the dollar, trading at 1.0484, buoyed by optimism surrounding the potential peace talks between Ukraine and Russia.
The British pound has also strengthened, reaching its highest level since early January, following data indicating unexpected economic growth in the U.K. during the final quarter of the previous year.
In Asia, the Japanese yen has maintained its recent strength, with the USD/JPY pair dropping to 152.52, amid ongoing expectations of further rate hikes by the Bank of Japan.
Market participants are now focusing on the upcoming U.S. retail sales data for January, which is anticipated to be subdued due to recent adverse weather conditions. Despite higher-than-expected inflation figures earlier in the week, the Federal Reserve has signaled a cautious approach to future rate cuts, contributing to the dollar's decline.
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