The dollar extended losses on Thursday, a day after the Federal Reserve delivered what some expect to be its last rate hike, while the market’s focus shifted across the Atlantic to the European Central Bank‘s impending rate announcement.
The Fed on Wednesday raised interest rates by a quarter of a percentage point, as expected, marking its 11th rate increase in its last 12 meetings.
While Fed Chair Jerome Powell left the door open to another hike in September, traders appeared unconvinced and the dollar extended on Wednesday’s modest post-meeting 0.3% drop.
“The market considers that it is likely the series of rate hikes we’ve had are over now,” said Jane Foley, head of FX strategy at Rabobank.
The dollar index, which measures the currency against six major peers, was last down 0.4% at 100.66.
“(The) U.S. is closer to the end of the hiking cycle than its peers. A dovish pivot from the Fed will likely exert a downward pressure on the U.S. dollar in the medium term,” said Emin Hajiyev, senior economist at Insight Investment.
