The Dollar Index (DXY), which previously reached 110.79, a 2-decade high, changed hands at 1.1% down to 108.585, pointing toward a 0.6% weekly decline.
The perception of the market that the Federal Reserve will raise interest rates by 75 bps at its upcoming meeting in less than 2 weeks was greatly supported by Jerome Powell, the Chair of the Federal Reserve, and his statement on September 8, confirming that the Fed was steadfastly dedicated to inflation targeting.
In spite of the fact that the bloc is probably about to enter a winter downturn, the European Central Bank (ECB) prioritized the battle against inflation on Thursday by raising its benchmark interest rates by an unexpected 75 bps and pledging additional increases.
When it was evident that various central banks besides the Fed also were hiking rates rapidly to control inflation, the hawkish approach sparked a severe round of earnings following the dollar’s prolonged gain. Some traders attempted to line up positions as a result.
Following a 2-decade low of 0.9863 a few days ago, the EUR/USD strengthened by a total of 1% to 1.0091, moving steadily closer to parity.
Alexander De Croo, the prime minister of Belgium, issued a warning on September 8, stating that the energy crisis will lead to de-industrialization and a huge threat of important social discontent in Europe.
The GBP/USD pair increased to 1.1616 by 1%, approaching the highest daily gains in a monthly period and reversing the little decline that followed the passing of Queen Elizabeth II, the longest reigning British monarch.
Following a meeting with Fumio Kishida, the Japanese Prime Minister on September 9, Haruhiko Kuroda, the Governor of the Bank of Japan (BoJ) added to prior vocal concerns over the currency’s dramatic decline to 24-year lows by saying that abrupt yen fluctuations were disadvantageous. This led USD/JPY to fall to 142.31.
When statistics on September 9 revealed that Chinese inflation declined in the last month, possibly paving the way for additional monetary policy easing by the Chinese government, the AUD/USD increased to 0.6845 as the USD/CNY decreased to 6.9264.