|

Forex Today: US Dollar consolidates losses, markets await comments from Fed officials

Here is what you need to know on Monday, February 17:

Major currency pairs trade near the previous week's closing levels on Monday as trading conditions remain thin, with financial markets in the US remaining closed in observance of the Presidents' Day holiday. The economic calendar will not offer any high-tier data releases but investors will pay close attention to comments from Federal Reserve (Fed) officials later in the day.

US Dollar PRICE Last 7 days

The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the British Pound.

 USDEURGBPJPYCADAUDNZDCHF
USD -1.50%-1.55%0.38%-0.74%-1.38%-1.24%-1.00%
EUR1.50% 0.02%2.02%0.89%0.12%0.35%0.60%
GBP1.55%-0.02% 1.84%0.84%0.10%0.29%0.56%
JPY-0.38%-2.02%-1.84% -1.16%-1.69%-1.63%-1.37%
CAD0.74%-0.89%-0.84%1.16% -0.62%-0.54%-0.30%
AUD1.38%-0.12%-0.10%1.69%0.62% 0.23%0.47%
NZD1.24%-0.35%-0.29%1.63%0.54%-0.23% 0.24%
CHF1.00%-0.60%-0.56%1.37%0.30%-0.47%-0.24% 

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The data published by the US Census Bureau announced on Friday that Retail Sales declined by 0.9% on a monthly basis in January, coming in worse than the market expectation for a decline of 0.1%. The US Dollar (USD) Index struggled to gain traction heading into the weekend and lost more than 1% on a weekly basis. In the European morning on Monday, the USD Index stays virtually unchanged on the day, slightly below 107.00.

During the Asian trading hours on Monday, the data from Japan showed that Industrial Production contracted by 0.2% in December, following the 0.3% growth recorded in November.  Meanwhile, Japanese Chief Cabinet Secretary Yoshimasa Hayashi said that Japan faces significant challenges if its companies become targets amid US President Donald Trump's policies. He added that the government will respond carefully to potential impacts. USD/JPY stays under modest bearish pressure to start the new week and trades below 152.00.

EUR/USD benefited from the broad-based selling pressure surrounding the USD and rose more than 1.5% in the previous week. The pair moves sideways in a tight range below 1.0500 in the European morning on Monday.

GBP/USD reached its strongest level since December 19 at 1.2630 on Friday but erased a portion of its daily gains in the second half of the day. Nevertheless, the pair rose 1.5% and closed the second consecutive week in the positive territory. In the early European session, GBP/USD stays quiet at around 1.2600.

The Reserve Bank of Australia (RBA) will announce monetary policy decisions in the early Asian session on Tuesday. Investors expect the RBA to lower the policy rate by 25 basis points (bps) to 4.1% from 4.35%. AUD/USD holds its ground early Monday and trades at its highest level since mid-December above 0.6350.

Gold corrected sharply lower on Friday and lost more than 1.5% on the day. XAU/USD regains its traction on Monday and trades modestly higher on the day near $2,890.

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

More from Eren Sengezer
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD struggles to extend advance above 1.1800

The EUR/USD pair posts a fresh weekly low near 1.1740 during the Asian trading session on Wednesday. The major currency pair is under pressure as the US Dollar edges higher despite Federal Open Market Committee minutes of the December policy meeting, released on Tuesday, showing that most policymakers stressed the need for further interest rate cuts.

GBP/USD tests 1.3450 support after moving below nine-day EMA

GBP/USD remains subdued for the second consecutive day, trading around 1.3460 during the Asian hours on Wednesday. The technical analysis of the daily chart indicates a weakening of a bullish bias as the pair is positioned slightly below the lower boundary of the ascending channel pattern.

Gold jumps on US rate cut prospects, safe-haven demand

Gold price extends the rally above $4,350 during the early European trading hours on Wednesday. Gold's price has surged about 65% this year and is set to record its biggest annual gains since 1979. The rally in the precious metal is bolstered by the prospect of further US interest rate cuts in 2026. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.

Bitcoin, Ethereum and XRP prepare for a potential New Year rebound

Bitcoin, Ethereum, and Ripple are holding steady on Wednesday after recording minor gains on the previous day. Technically, Bitcoin could extend gains within a triangle pattern while Ethereum and Ripple face critical overhead resistance. 

Economic outlook 2026-2027 in advanced countries: Solidity test

After a year marked by global economic resilience and ending on a note of optimism, 2026 looks promising and could be a year of solid economic performance. In our baseline scenario, we expect most of the supportive factors at work in 2025 to continue to play a role in 2026.

Crypto market outlook for 2026

Year 2025 was volatile, as crypto often is.  Among positive catalysts were favourable regulatory changes in the U.S., rise of Digital Asset Treasuries (DAT), adoption of AI and tokenization of Real-World-Assets (RWA).