US Dollar Rises As Trader's Anticipate US Fed Rate Hike Pause

(RTTNews) - The U.S. dollar strengthened against other major currencies in the Asian session on Monday, as traders bolstered hopes that the U.S. Federal Reserve will pause its rate hikes in the monetary policy meeting due this week.

Thursday's report showing U.S.initial jobless claims jumped to their highest level since October 2021 last week added to the optimism about the Fed pausing its interest rates hikes, as the central bank has warned about the impact of labor market tightness.

Key U.S. inflation reports are also likely to be in the spotlight this week, as the data could have a significant impact on the outlook for interest rates.

Traders are cautiously optimistic ahead of the monetary policy meetings of the U.S. Fed, the European Central Bank and the Bank of Japan later in the week.

CME Group's FedWatch Tool is currently indicating a 71.2 percent chance the Fed will leave rates unchanged at its two-day meeting that ends on Wednesday, but a 28.8 percent chance of another quarter point rate hike in July.

In the Asian trading today, the U.S. dollar rose to 4-day highs of 1.0733 against the euro and 0.9044 against the Swiss franc, from last week's closing quotes of 1.0748 and 0.9031, respectively. If the greenback extends its uptrend, it is likely to find resistance around 1.05 against the euro and 0.92 against the franc.

Against the pound and the yen, the greenback advanced to 1.2564 and 139.65 from Friday's closing quotes of 1.2577 and 139.35, respectively. The greenback may test resistance around 1.21 against the pound and 142.00 against the yen.

Looking ahead, U.S. consumer inflation expectations for May and monthly budget statement for the month of May, are due to be released in the New York session.