The dollar rose from an eight-week low against the euro, yen and Swiss francs, with investors consolidating positions ahead of the Federal Reserve’s monetary policy meeting this week.
The dollar had fallen nearly 3% since late March as U.S. Treasury yields.
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“We’re seeing traders square up ahead of the Fed meeting. The dollar has been under pressure the last couple of weeks. So you’re seeing more of a sideways market into the FOMC,” said Edward Moya, senior market strategist, at online FX trading platform OANDA.
The Federal Open Market Committee bought its two-day meeting to an end on Wednesday. While no major policy changes are expected, investors will pay close attention to comments from Chairman Jerome Powell.
Powell is likely to face questions over improving the labour market and rising coronavirus vaccinations warrant a withdrawal of monetary easing, though analysts believe he will find such talk to be premature.
In midmorning trading, the euro fell 0.3% against the dollar to $1.2065 after disappointing eurozone data.
German business morale improved by less than expected in April as the third wave of COVID-19 infections and problems with the supply of components in the industrial sector seemed to slow the recovery in Europe’s largest economy.
The dollar index was up slightly at 91.914, recovering from an eight-week low.
Against the yen, the dollar was up 0.1% at 107.96 while also gaining 0.2% versus the Swiss franc to 0.9151 francs.