Dollar Steadies as Sterling and Euro Retreat
The US dollar steadied after a significant selloff triggered by a dovish Federal Reserve surprise and Japanese yen intervention. The greenback's decline this week accelerated after markets concluded that the Fed was reluctant to translate its price-stability rhetoric into concrete policy tightening.
Fed Chair Kevin Warsh's ambiguity over the central bank's reaction function compounded the selloff, said Francesco Pesole, FX strategist at ING. 'There may still be room for further USD long-squeezing, and we remain reluctant to call the bottom in this dollar selloff just yet,' he added.
The Sterling traded lower on Friday, with GBP/USD falling 0.13% to 1.3448 as of 05:45 ET (09:45 GMT). The move is entirely dollar-driven and reflects no shift in UK fundamentals. No significant domestic data or policy developments are in focus today.
The euro also retreated, with EUR/USD slipping 0.20% to 1.1505 after breaching 1.15 for the first time in weeks during Thursday's session. ING sees the pair's near-term ceiling around 1.160 and would not view a move above this level as sustainable unless markets repriced USD rates materially lower again.