Dollar index holds at 102, euro drops to 2-week low

As global markets adopted a cautious wait-and-see stance ahead of critical monetary policy decisions and a heavy data calendar, the US currency maintained its strong course. Following a consecutive 2-day rising streak, the dollar index (DXY) held at the 102 point level on Tuesday. Having completed the previous session with a 0.14% gain at 102.10 points, the index moved within a range of 101.99 to 102.12 points during the day.

On the European side, concerns regarding France's budget and fiscal balance increased pressure on the euro. While the Euro/Dollar pair retreated with a 0.07% drop to the 1.12 level at the last close, losses in the pair widened to as low as 1.1171 in recent transactions. Falling to its lowest level in about 2 weeks with this move, the euro lost approximately 1.4% in value against the dollar across October.

What probabilities stand out for the Fed interest rate decision?

At the center of pricing lies the Federal Reserve (Fed) meeting. Market participants calculate the probability of the Fed leaving the interest rate unchanged at this week's meeting at approximately 90%. In contrast, the probability of an interest rate hike at the December meeting is priced at around 82%. In the search for direction regarding the subsequent steps of monetary policy, the upcoming gross domestic product (GDP) growth and personal consumption expenditures (PCE) price index will generate decisive signals.

How did France and artificial intelligence affect the dollar?

Another development supporting the dollar on a global scale occurred on the technology front. The initial public offering (IPO) filing by artificial intelligence company Anthropic revived interest in the sector. Investors repricing the contribution that artificial intelligence-driven developments will provide to US economic growth drove up demand for the dollar.

This content is for information purposes only and does not constitute investment advice.