Yesterday, the price of one Euro rose 80 pips to 1.0833 from 1.0768 to hit a high. With that momentum, Fed official Harker’s comments that it is time to step up to 25 bps hikes, and the subsequent drop in the probability of a 50 bps hike on Feb 1, the dollar gained ground.
In addition, there may be some selling in USD/JPY after the Japanese economy release earlier this week, which suggested that the BOJ would soon take a less-rewarding monetary policy stance.
Concerns over the BOJ’s monetary policy next week, which could be viewed as a hint of less-dovish policy, may be the culprit. In any case, the idea that the Fed will raise rates further into a hard landing is less likely.
