Dollar wobbles on signs the Fed won’t raise rates in June

The dollar was heading for its worst one-day loss in almost a month on Thursday, a day after Federal Reserve officials indicated the US central bank was likely to skip raising interest rates at its next meeting.

The euro rebounded from a two-month low on Thursday after European Central Bank (ECB) President Christine Lagarde said further tightening of monetary policy was necessary.

The Dollar Index=USD, which measures the currency against a basket of six pairs, fell 0.624% to 103.480, below a two-month high of 104.7 hit on Wednesday as investors trimmed bets on that the Federal Reserve will raise interest rates this month.

Federal Reserve officials aimed to “skip” a rate hike at their meeting on June 13-14, giving the central bank time to assess the impact of its tightening cycle so far when inflation data is still high.

According to the CME’s FedWatch tool, markets see a 32% chance that the Federal Reserve will raise rates by 25 basis points at its June meeting, up from 67% a day ago.

“I think the market anticipates that the dollar will continue to be in a position where it will fight against higher-yielding currencies,” said Edward Moya, a markets analyst at OANDA.

The euro EUR=EBS was up 0.73% at $1.0767, after hitting a two-month low of $1.0635 on Wednesday, after some European countries released inflation data showing signs that pressures had eased. on prices have been relaxed.

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