The U.S. dollar soared against a basket of major currencies on Monday, rebounding from a three-week low, ahead of the Federal Reserve’s monetary policy meeting.
The Federal Reserve will convene on Tuesday and Wednesday to decide on monetary policy, amid expectations policymakers will stand pat.
Policymakers will probably hold their interest rates after the first rate increase in nearly a decade in December amid the turbulence in financial markets, slowdown in emerging economies and low inflation.
The dollar remained under pressure over the previous two weeks on predications the Fed would not hike rates in the near term.
The dollar index plunged to a bottom of 95.92 the previous week despite the announcement of the ECB of a batch of bold measures.
The euro fell against the dollar to 1.1102, with political uncertainty after the defeat of German Chancellor Angela Merkel in elections over the weekend.
The pound retreated to 1.4324 amidst persisting concerns from the possible exit of Britain out of the European Union.
Against the yen, the dollar dropped as worries regarding global growth sparked haven demand on the yen ahead of knowing the outcome of the BOJ’s policy meeting on Tuesday.
Morgan Stanley worsened the sentiment after cutting its global growth forecasts and warning of global recession.
The plunge in oil prices from three-month highs added more negativity to the sentiment, pushing U.S. equities lower.
