However, the downside risks for the dollar are still here. On Wednesday, FOMC meeting minutes could show that the is preparing to take a pause in tightening this year, citing moderating growth globally. By the way, in December, it was the first time in over two years that the Fed had lowered its forecasts rather than raising them. According to the latest Powell’s comments that were more cautious than previously, the bank is really preparing the ground for at least a more moderate tightening down the road.
Investors are now focused on the signals from the Fed and the upcoming meeting minutes could bring more to the markets. The dollar may resume its decline after the current rebound and finish the week on a weaker footing if Powell’s speech on Friday comes as ‘dovish’.