Dollar Fluctuates Near One-Month High Ahead of Federal Reserve Decision.. Earthquake Boosts Yen

SadaNews – The US dollar fluctuated on Wednesday near its highest level in a month, as markets await the Federal Reserve's decision on monetary policy, while the euro heads toward ending a six-month streak of gains, amidst investors’ assessment of the costs of a new trade agreement between the United States and the European Union.

The Japanese yen rose against the dollar following a strong earthquake that struck the Kamchatka Peninsula in far eastern Russia, causing tidal waves (tsunami) and prompting authorities to issue evacuation orders in the region and most of the eastern coast of Japan.

Currency markets experienced relative stability, as investors hesitated to take large positions ahead of the release of important economic data and central bank meetings in Canada, Japan, and the United States.

In Stockholm, US and Chinese officials agreed to seek an extension of the 90-day tariff truce, following two days of talks described by both sides as "constructive." According to US officials, the final decision on extending the truce, which expires on August 12, rests with President Donald Trump.

These talks follow the announcement of a framework agreement between the United States and the European Union on Sunday, which elicited a mix of relief and concern in Europe, amid criticisms that it is biased in favor of Washington and unequal.

Investors are closely monitoring developments in trade agreements, as negotiations are accelerating to finalize them before August 1, the deadline set by Trump.

Charut Chanana, Chief Investment Strategist at Saxo Bank in Singapore, stated: "It seems that markets are viewing trade agreements as more symbolic and tactical rather than as actual structural solutions."

In terms of currencies, the euro slightly rose to $1.1555 after dropping at the beginning of the week to its lowest level in a month at $1.15185. Despite its 11.7% gains since the beginning of 2025, the euro aims to record its first monthly decline this year.

The decline in the dollar's strength, a result of the Trump administration's volatile trade policies, has contributed to the stronger performance of the euro this year.

The British pound reached $1.3355, while the Australian dollar stabilized at $0.6514 in the latest trades, after weaker-than-expected inflation data boosted bets on an interest rate cut next month.

As for the dollar index, which measures the performance of the US dollar against a basket of six major currencies, it reached 98.823, remaining close to its highest level in a month and heading toward recording its first monthly gain of the year.

Investors' focus has shifted to central bank meetings, with widespread expectations that the Federal Reserve will keep interest rates unchanged later today, making Chairman Jerome Powell's statements pivotal in forecasting the future direction of monetary policy.

This meeting comes under ongoing pressure from President Donald Trump to lower interest rates, accompanied by repeated public criticisms of the Fed's Chairman from the US administration.

The Bank of Japan is also expected to keep interest rates unchanged, while attention will be on Governor Kazuo Ueda's comments, especially with hopes that the recent trade agreement between Tokyo and Washington may provide the Bank of Japan with room to raise rates later this year.

The yen rose 0.4% to 147.85 yen per dollar, before recording 148.06 in the latest trades, supported by the earthquake's effects and tsunami waves, amidst fears of potential damage to Japanese infrastructure.

Christopher Wong, a currency analyst at OCBC Bank, stated that the yen's rise was driven by the earthquake's repercussions and may have been inflated by weak market liquidity.

He added: "The nightmare of the 2011 Tohoku earthquake still lingers in the minds," referring to the disaster that struck northeastern Japan in March 2011.

In the cryptocurrency segment, Bitcoin rose by 0.5% to $118,042.85, while Ether climbed 1.2% to $3,808.81.