The US dollar edged slightly lower against the euro on Wednesday, as a sentiment of reluctance remained dominant between currency traders. Continued uncertainty towards the economic plans of US President Donald Trump prevented the nationâs currency from maintaining its recent rally.
The uncertainty stemmed from Trumpâs protectionist scheme for the US economy, which could harm US trade and might have its negative effect on economic growth. The US president started off his presidency last Monday by signing an executive order that officially withdraws the United States from the Trans-Pacific Partnership.
The negative sentiment is weighing down on tradersâ optimism toward a rally the dollar might enjoy as inflation rises under Trumpâs administration. The president, who promised to increase infrastructure spending and cut corporate taxes, will presumably have a positive effect on inflation. Higher inflation backs the Federal Reserveâs case of raising interest rates, which supports the dollar higher.
Traders will be waiting further signals from Trump on what campaign promises he made will be brought to reality, and at what pace. Recent comments from the president criticizing the strength of the dollar left the market with conflicting views on his future views. A lack of important data releases today added to the absence of a trend for the US currency.
EUR/USD traded at 1.0750 as of 16:50 GMT on Wednesday, from 1.0763 at 12:20 GMT, the pairâs highest level today. EUR/USD kicked off the day at 1.0723.
GBP/USD rose to 1.2624, pairâs strongest level since December 14, from 1.2526 at the beginning of the day.
The Dollar Index, which measures the strength of the US currency against a basket of its major peers, hovered at 100.01 as of 16:45, from 100.35 on Tuesday.
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