The European Central Bank (ECB) maintained interest rates at record highs of 4.00% on Thursday, saying it had made considerable progress in reducing inflation while cautiously setting the stage for a rate reduction later this year.
This week, the dollar began to weaken as Federal Reserve Chair Jerome Powell expressed greater confidence in lowering interest rates in the upcoming months, which helped the euro.
Powell stated in a speech on Thursday that the Fed was “not far” from having the assurance required to lower interest rates. In general, when central banks cut interest rates, currencies deteriorate.
The optimism that Chair Powell expressed this week over the possibility of starting the rate-cutting cycle this year is reinforced by the statistics released on Friday, according to Lindsey Bell, chief strategist at 248 Ventures in Charlotte, North Carolina.
In the meantime, news that the Bank of Japan is warming to the idea of raising interest rates and adopting a new quantitative monetary policy framework helped push the yen to a five-week high versus the dollar.
According to Jiji News Agency, the BoJ is thinking about creating a structure that will display the projected amounts for future government bond purchases.