(Bloomberg) -- A dollar gauge erased earlier gains to trade marginally weaker, while the euro gained after German lawmakers passed a landmark spending package.
The yen was steady ahead of Bank of Japan policy decision. Both the BOJ and Federal Reserve are expected to keep borrowing costs unchanged Wednesday, with traders waiting for any guidance on further rate moves.
The Bloomberg Dollar Spot Index fell less than 0.1%, after rising as much as 0.3% earlier on better-than-expected US housing starts and import price data.
“We saw the dollar gain earlier in the session on data, namely housing starts, but that enthusiasm has faded in the afternoon,” said John Doyle at Monex. “The euro is also finding some support after the German spending package, causing the dollar to drag”
“On the dot plot, we don’t expect a major shift although the Fed may want to reflect current market expectations by pushing the 2025 median estimate slightly lower,” said Julien Lafargue, chief market strategist at Barclays Private Bank, adding that the central bank may decide to indicate “that more than two 25 basis points interest rate cuts are possible”
“The Fed, just like the market, desperately need some visibility on trade, tariffs, and overall policies,” he said
EUR/USD rose 0.3% to 1.0949, at a five-month high
The euro move up is “a combination of the news of the approval of the German fiscal package and to a lesser extent the Trump-Putin talks,” said Aroop Chatterjee, managing director for macro strategy and emerging markets at Wells Fargo in New York
“The narrative of long EUR remains, especially amid the left tail of the US economic slowdown is gradually getting bigger than what the market had anticipated few weeks ago,” said Yusuke Miyairi, a currency strategist at Nomura International Plc
