In Tokyo and London on January 23, the dollar remained range-bound against major currencies on Thursday as it struggled to find direction amidst the absence of news on tariffs from U.S. President Donald Trump.
Throughout the upcoming week, central bank policy decisions are expected to influence currency movements. The Bank of Japan is anticipated to announce an interest rate increase at the conclusion of its two-day meeting on Friday, while rate decisions from the U.S. Federal Reserve and the European Central Bank are scheduled for the following week on Wednesday and Thursday, respectively.
The dollar index, which assesses the currency against six key counterparts including the euro and yen, edged up by 0.09% to 108.37 in early European trading.
Having experienced a significant 1.2% decline on Monday, the dollar had previously surged to a more than two-year high of 110.17 on January 13 based on the solid U.S. economy and expectations of broad U.S. tariffs that could impact other countries' currencies.
The euro weakened by 0.15% to $1.0394. Speculations suggest that the ECB will likely decrease rates by a quarter point next week.
Market experts are observing Trump's approach to tariffs, with Carol Kong, a currency strategist at Commonwealth Bank of Australia, noting that Trump's stance towards China has been less aggressive than anticipated. However, there are concerns that risk sentiment remains fragile and can quickly turn sour if President Trump adopts a more aggressive tone.
On Monday, Trump issued a trade memo directing federal agencies to review various trade matters by April 1, a date many anticipate will reveal tariff plans.
The dollar gained by 0.15% against China's yuan in offshore trading, at 7.294 yuan. Since Trump's inauguration, it has declined by about 0.5% against the yuan.
Jane Foley, head of FX strategy at Rabobank, commented that the market initially feared significant tariffs and a weakening of the Chinese renminbi, but recent developments and a change in tone have shifted perceptions.
With China announcing plans to direct billions of yuan from state-owned insurers into stocks, the yuan remained flat while the Japanese yen stayed at 156.49 per dollar.
The Canadian dollar slightly dropped to C$1.4394 against the greenback, due to concerns about tariffs, and the Mexican peso remained stable at 20.49 versus the U.S. dollar.