Dollar, Federal Reserve Officials, and Investors

The U.S. dollar declined to the bottom of its recent range on Tuesday, as softer than expected U.S. data and the position of Federal Reserve officials diminished investor fears about inflation forcing interest rates higher. Investors are heavily short dollars in the trust that low U.S. rates will push cash abroad as the world recovers from the coronavirus pandemic.

Early trade in Asia was steady. The dollar index was nursing a 0.2% overnight loss at 89853, which is just above a four-month low. The euro held a 0.3% overnight gain at $1.2213. It is close to testing resistance around $1.2245. 

The U.S. national activity index and dovish comments from Fed speakers provided some support for the view that any policy tightening is not happening any time soon. Federal Reserve Bank of St. Louis President James Billard made an interesting comment. He stated that it is not the best time to change the parameters of monetary policy as the pandemic is not over yet. 

Traders are closely watching the situation as the policy response to inflation and any data could be helpful to learn more. At the moment, the whole world is in a wait-and-see mode. 

Dollar, crypto, and main findings 

The dollar also eased on the Australian and New Zealand dollars as well as the yen. 

The yen was last at 108.79 per dollar while the Australian and New Zealand dollars drifted round the middle of ranges that have held them since April. The Australian dollar bought $0.7750 while the New Zealand dollar bought $0.7211.

The British pound rose about 1.2% over the past three weeks while other major currencies were not so lucky. The pound was stalled at $1.4160. 

Bitcoin rose 12% on May 24. At $39,000 on May 25 is on the verge of regaining its 200-day moving average.