The dollar's decline took a breather on Thursday as traders squared positions ahead of a stacked week of central bank meetings, with the Federal Reserve, European Central Bank and Bank of Japan all due to decide on interest rates in the coming days. The ICE Dollar Index edged up 0.14% to 101.82, a modest move that nonetheless broke a run of selling pressure built on bets that a resilient, AI-driven U.S. economy will keep the Fed in no hurry to cut rates further.
The pause was far from uniform across currency pairs. The euro slipped 0.3% to $1.1198 and sterling eased 0.18% to $1.337, giving back part of a rally built on hotter-than-expected British inflation data that had briefly pushed the pound to a one-month high above $1.34 earlier in the week. The Australian dollar fell 0.21% to $0.7012, even after touching a three-week high a day earlier, while the New Zealand dollar held near a one-month high on growing bets the Reserve Bank of New Zealand will raise rates next week.
The yen was the standout mover, strengthening 0.51% to 157.33 per dollar in its best single-day gain in nearly a month, as traders rotated into havens. That shift came alongside broader signs of risk aversion: Brent crude climbed to its highest level since May following reported Houthi attacks on Saudi energy infrastructure, French 10-year bond yields widened to 177.7 basis points over Germany's, their widest gap since 2011, and bitcoin dropped 3.2% to $81,929.
