US dollar weakens as investors anticipate plateau in interest rates

The US dollar faced a broad decline on Thursday, as investors increasingly believe that US interest rates might have reached their peak, following the Federal Reserve’s decision to leave them unchanged. Market attention is now squarely fixed on the upcoming release of the US non-farm payrolls data for October, with an anticipated increase of 180,000 jobs. If this figure surpasses expectations, it could trigger a surge in demand for the dollar, analysts suggest.

The USD index, which measures the dollar against a basket of six major currencies, failed to record an October close above the crucial level of 107.36 a few weeks ago. This setback has impacted the medium-term technical outlook. However, the 14-week bullish momentum has consistently displayed positive readings since August, reinforcing the underlying bullish bias. For dollar enthusiasts, the challenge remains: achieving a weekly close above 107.36, which could pave the way for substantial gains in the greenback.

In the currency markets, the New Zealand dollar (NZD/USD) has emerged as the day’s frontrunner against the weakening dollar, surging by 0.96%. Not far behind, the Australian dollar (AUD/USD) registered a 0.71% increase. The Euro to US dollar pair (EUR/USD) climbed by 0.62%, while the British pound to US dollar pair (GBP/USD)saw a modest 0.38% uptick, just ahead of the Bank of England’s highly anticipated interest rate decision.

Thursday’s global economic calendar sees the UK interest rate decision at 12:00 GMT and the US unemployment insurance weekly claims report at 13:30 GMT.