The yen traded around 155.44 per dollar, holding stable after heavy losses in November. The British pound hovered near $1.3325.
The U.S. dollar slipped on Monday as investors turned their attention to a heavy week of central bank meetings.
The biggest focus is the U.S. Federal Reserve, which is widely expected to deliver a rate cut on Wednesday, but analysts warn the committee is deeply split, making the final decision unpredictable.
Aside from the Fed, the central banks of Australia, Brazil, Canada, and Switzerland also meet this week.
None of them is expected to change their policy stance, but traders will be watching their comments closely for clues about future moves.
Economists say the Fed is likely to lower rates but still signal a tough road ahead for any additional cuts.
A firmer message from Chair Jerome Powell and the Fed’s forecasts could support the dollar if markets scale back expectations of two or three cuts in 2026.
However, mixed opinions among Fed members could make the messaging harder to read.
BNY’s macro strategist Bob Savage expects disagreements within the committee.
The Fed has not seen three or more dissenting votes since 2019, and such splits are rare, happening only nine times since 1990.
Although the dollar has been weaker for three straight weeks, investors betting on a stronger greenback are still holding large long positions.
This is the biggest bullish position since before Donald Trump’s surprise tariff announcement, which once shook the markets.
The U.S. economy is showing mixed signals: The job market is cooling, Growth remains solid, the new government spending package is expected to boost activity, and inflation remains above the Fed’s 2% target.
These factors may convince the Fed to take a slow approach toward further rate cuts.
The euro gained 0.1% to $1.1652, supported by rising eurozone bond yields.
Germany’s 30-year yield reached its highest point since 2011.
Unlike the Fed, the European Central Bank is not expected to cut rates next year.
ECB policymaker Isabel Schnabel even hinted that a rate hike is still possible.
The Australian dollar touched $0.6649, its strongest level since mid-September, before settling slightly lower.
The Reserve Bank of Australia meets on Tuesday, with markets expecting the next rate move to be upward, possibly by May.
ANZ analysts now believe the RBA will keep rates on hold at 3.60% for an extended period.
The Bank of Canada is also expected to maintain its current rate on Wednesday.
A rate hike is priced in for late 2026. The Canadian dollar traded at C$1.3819, slightly weaker after hitting a 10-week high on Friday.
