The U.S. dollar weakened on Tuesday as global investors awaited key central bank meetings, including an expected Federal Reserve rate cut, while monitoring President Donald Trump’s Asia tour for potential progress on U.S.-China trade relations.
Early signs of easing tensions between Washington and Beijing lifted market sentiment on Monday, pushing the dollar lower against major rivals. However, analysts warned that any trade deal emerging from this week’s talks may fall short of market hopes. Trump is set to meet Chinese President Xi Jinping in South Korea on Thursday, expressing optimism that both nations could reach an agreement. Chinese officials, meanwhile, have remained cautious and tight-lipped about possible outcomes.
Currency markets stayed largely subdued, with the euro rising to a one-week high at $1.1655 and the British pound holding near $1.3344. The dollar index stood at 98.786, following a 0.15% decline in the previous session. The yen strengthened to 152.42 per dollar ahead of the Bank of Japan meeting, where no rate changes are expected.
Investors are also focused on the Federal Reserve’s policy meeting, where a 25-basis-point rate cut is widely anticipated. Traders are watching for signals on whether the Fed plans to slow its quantitative tightening program and hints from Chair Jerome Powell about future rate cuts. Economists, including Goldman Sachs’ David Mericle, expect another rate cut in December as the ongoing U.S. government shutdown hampers economic data collection.
Elsewhere, the European Central Bank is expected to hold rates steady, while the Australian dollar climbed 0.11% to $0.6563 and the New Zealand dollar edged up to $0.5778. Analysts say the combination of Fed easing, steady global policy, and resilient economic data continues to drive risk appetite and market optimism.


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