Investing.com - The U.S. dollar edged lower Tuesday ahead of the start of the latest Federal Reserve meeting, while the euro gained ahead of an expected vote on Germany’s massive stimulus proposal.
At 05:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower to 102.890, trading above last week’s five-month trough.
Fed growth forecasts in focus
The greenback has struggled of late amid concerns that the uncertainty stemming from U.S. President Donald Trump’s sweeping tariffs will hit economic activity going forward.
Data released on Monday showed that U.S. retail sales rebounded in February, suggesting that the economy continued to grow in the first quarter, though at a moderate pace.
Retail sales rose 0.2% last month after a revised 1.2% decline in January, but below the 0.6% gain forecast.
Attention now turns to the start of the latest Federal Reserve policy-setting meeting, to be concluded on Wednesday.
The U.S. central bank is widely expected to keep rates unchanged, and thus attention is likely to be on the publishing of new economic projections, which will offer investors the most tangible evidence yet of how U.S. central bankers view the likely impact of the Trump administration’s policies on the economy.
“The Fed – which announces rates tomorrow – does not look like it’s in a position to offer much respite to risk sentiment as rising inflation expectations still warrant caution on cuts,” said analysts at ING, in a note.
Euro awaits German debt vote
In Europe, EUR/USD traded 0.3% higher at 1.0951, trading near its highest level since October, ahead of a scheduled parliamentary vote on Germany’s massive stimulus proposal.
Germany’s constitutional court on Monday threw out new challenges by opposition parties against a plan by the prospective coalition government to push a massive public borrowing initiative through the outgoing parliament.
Traders are also awaiting news about the phone call between U.S. President Donald Trump and his Russian equivalent Vladimir Putin over a potential ceasefire in the Ukraine war.
“EUR/USD is eyeing 1.100 again. We aren’t convinced there is enough thrust for a decisive break higher, especially as the Fed may fail to trigger much further repricing in the USD curve. Still, we could see the pair move above 1.0950 today,” said ING.
GBP/USD rose 0.1% to 1.3001, climbing above the 1.30 level for the first time since November.
The Bank of England is widely expected to keep interest rates unchanged on Thursday after inflation edged higher last month.
Yen slips ahead of BOJ decision
In Asia, USD/JPY climbed 0.3% to 149.70, ahead of the conclusion of the latest Bank of Japan meeting on Wednesday.
The Japanese central bank is expected to maintain the current interest rate at 0.5% this week, despite rising inflationary pressures, as officials are concerned about rising trade tensions stemming from U.S. President Donald Trump’s tariffs.
USD/CNY traded 0.1% lower to 7.2234, trading largely unchanged in the wake of China unveiling on Sunday a comprehensive "special action plan" to bolster domestic consumption, aiming to invigorate economic growth amid recent challenges.