Forex Today: US Dollar drops to multi-year lows ahead of mid-tier data
Here is what you need to know on Thursday, June 26:
The US Dollar (USD) stays under bearish pressure in the second half of the week, with the USD Index slumping to its weakest level since March 2022 below 97.50. May Durable Goods Orders and Pending Home Sales data will be featured in the US economic calendar, alongside the weekly Initial Jobless Claims. Policymakers from major central banks will be delivering speeches throughout the day.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -2.11% | -2.41% | -1.82% | -0.38% | -1.59% | -1.73% | -1.95% | |
| EUR | 2.11% | -0.33% | 0.35% | 1.77% | 0.49% | 0.39% | 0.12% | |
| GBP | 2.41% | 0.33% | 0.69% | 2.10% | 0.82% | 0.72% | 0.45% | |
| JPY | 1.82% | -0.35% | -0.69% | 1.43% | 0.19% | 0.13% | -0.23% | |
| CAD | 0.38% | -1.77% | -2.10% | -1.43% | -1.16% | -1.36% | -1.63% | |
| AUD | 1.59% | -0.49% | -0.82% | -0.19% | 1.16% | -0.12% | -0.36% | |
| NZD | 1.73% | -0.39% | -0.72% | -0.13% | 1.36% | 0.12% | -0.26% | |
| CHF | 1.95% | -0.12% | -0.45% | 0.23% | 1.63% | 0.36% | 0.26% |
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 USD weakened against its rivals late Wednesday and struggled to find demand early Thursday on news claiming that United States (US) President Donald Trump is considering naming the next Federal Reserve (Fed) Chair candidate early, in a bid to undermine Fed Chair Jerome Powell. Citing people familiar with the matter, the Wall Street Journal reported that Trump could announce Powell's possible replacement by September or October. Kevin Hassett, Director of the National Economic Council, and Treasury Secretary Scott Bessent are among the names under consideration, with Trump evaluating their commitment to lowering interest rates. Meanwhile, US stock index futures trade marginally higher in the European morning.
EUR/USD benefits from the broad-based USD weakness and trades at its highest level since September 2021 above 1.1700 early Thursday.
After posting gains for the fourth consecutive trading day on Wednesday, GBP/USD preserves its bullish momentum and trades above 1.3700 for the first time since January 2022.
USD/CAD edges lower and tests 1.3700 in the European session. Statistics Canada will publish the monthly Gross Domestic Product (GDP) data for April on Friday.
USD/JPY stays on the back foot after posting small gains on Wednesday and trades near 144.00 on Thursday, losing nearly 1% on a daily basis.
AUD/USD extends its weekly rally and trades above 0.6500 in the European session on Thursday.
Following the sharp decline seen earlier in the week, Gold found support and registered small gains on Wednesday. XAU/USD continues to inch higher and closes in on $3,350 early Thursday.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Author
Eren Sengezer
FXStreet
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.
