The dollar fell Monday as investors turned cautious ahead of a Federal Reserve meeting and a key U.S. data release later in the week.
The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently down 0.3% at 87.52.
Continue Reading Below
Investors are awaiting several developments this week to gauge whether the U.S. currency will extend a rally that has seen it rise more than 3% from its September lows. Indications that a recent run of solid U.S. data may be pushing the Fed to tighten monetary policy at a faster clip will likely buoy the U.S. currency, as higher rates make the dollar more attractive to investors seeking yield. The central bank concludes its monetary policy meeting on Nov. 1.
Many are also keeping an eye on U.S. employment data, due out Friday. A strong number would be further evidence that the pace of expansion in the U.S. economy has finally picked up, after months of uneven growth. A report released last week showed that gross domestic product expanded at a rate of 3% in July through September, beating economists' estimates.
"The dollar remains in the ascendancy and we do not believe that the rally is over," analysts at Standard Bank said in a note to clients.
They expect the dollar to rise against the euro in the next few months, with the European currency finishing the year as low as $1.10. The euro was recently up 0.4% at $1.1656.
The dollar has also been boosted by expectations that Fed Chairwoman Janet Yellen may be replaced by a more hawkish leader. President Donald Trump is likely to announce Federal Reserve governor Jerome Powell as his nominee to be the next chairman of the U.S. central bank this week, The Wall Street Journal has reported, citing sources familiar with the matter.
Mr. Powell has shown more openness than Ms. Yellen, however, to loosening some of the financial rules the Fed and other regulators have implemented since the crisis.
Write to Ira Iosebashvili at email@example.com
(END) Dow Jones Newswires
October 30, 2017 16:56 ET (20:56 GMT)