The U.S. dollar held firm on Monday, with investors bracing for a crucial week of central bank meetings led by the Federal Reserve. Trading was thin in Asia due to a Japanese holiday, keeping most currencies within tight ranges.
The euro dipped 0.09% to $1.1724 after Fitch downgraded France’s credit rating to AA-, its lowest level on record. Despite concerns over political instability and mounting debt, markets largely brushed off the move. Analysts noted that focus remains on upcoming interest rate decisions in the U.S., Japan, the U.K., Canada, and Norway.
The dollar index steadied at 97.65 as markets await the Fed’s policy announcement on Wednesday. Expectations of a 25-basis-point cut are fully priced in, though some analysts suggest a surprise 50-basis-point move could weaken the greenback significantly. Investors will closely monitor the Fed’s “dot plot” and Chair Jerome Powell’s guidance for signals on the pace of future easing.
Sterling held near $1.3554, while the Australian dollar hovered close to a 10-month high at $0.6652. The yen strengthened slightly to 147.56 per dollar ahead of the Bank of Japan’s meeting, with Governor Kazuo Ueda’s comments expected to guide sentiment. Analysts at MUFG said the yen’s weakness could reverse if the BOJ signals a potential rate hike as early as next month.
Elsewhere, the New Zealand dollar eased 0.03% to $0.5953, while the offshore yuan stayed steady at 7.1230 per dollar. Meanwhile, U.S. and Chinese officials wrapped up the first day of trade talks in Madrid, focusing on tariffs and Washington’s pressure over Chinese imports of Russian oil, alongside concerns about TikTok’s future in the U.S.