- The US Dollar Index advances to near 108.20 ahead of the Fed’s monetary policy decision in which the central bank is expected to keep interest rates steady.
- Investors will be keen to know the impact of Trump’s economic agenda on the interest rate outlook from Fed Powell.
- US Donald Trump is poised to impose 25% tariffs on Canada and Mexico.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near Friday’s high of 108.20 in Wednesday’s North American session. The US Dollar (USD) performs strongly against its major peers ahead of the Federal Reserve’s (Fed) monetary policy decision, which will be announced at 19:00 GMT.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.43% | 0.34% | -0.14% | 0.42% | 0.68% | 0.57% | 0.40% | |
| EUR | -0.43% | -0.09% | -0.52% | -0.00% | 0.24% | 0.17% | -0.03% | |
| GBP | -0.34% | 0.09% | -0.46% | 0.09% | 0.33% | 0.24% | 0.06% | |
| JPY | 0.14% | 0.52% | 0.46% | 0.54% | 0.80% | 0.68% | 0.52% | |
| CAD | -0.42% | 0.00% | -0.09% | -0.54% | 0.26% | 0.15% | -0.03% | |
| AUD | -0.68% | -0.24% | -0.33% | -0.80% | -0.26% | -0.10% | -0.28% | |
| NZD | -0.57% | -0.17% | -0.24% | -0.68% | -0.15% | 0.10% | -0.18% | |
| CHF | -0.40% | 0.03% | -0.06% | -0.52% | 0.03% | 0.28% | 0.18% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
According to the CME FedWatch tool, trades are confident that the Fed will certainly announce a pause to the current policy-easing cycle by leaving interest rates unchanged in the range of 4.25%-4.50%. Therefore, the impact of the Fed’s policy decision on the US Dollar won’t last long.
However, the Fed’s guidance on the monetary policy outlook will be more critical for currency markets for which investors will pay close attention to Chair Jerome Powell’s press conference. Powell is expected to face questions like how long the Fed will keep interest rates steady and the impact of United States (US) President Donald Trump’s economic agenda on the monetary policy stance.
Market participants are worried that Trump’s economic policies, such as immigration controls, higher tariffs and lower taxes will be pro-growth and inflationary for the economy, which could force the Fed to leave interest rates at their current levels for longer.
Meanwhile, Donald Trump is poised to raise tariffs on Canada and Mexico by 25% from February 1. White House Press Secretary Karoline Leavitt reported on Tuesday that 25% tariffs on Canada and Mexico from February 1 are “still on the books”. Leavitt added that the President is “very much still considering 10% tariffs on China” from Saturday.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD stays defensive below 0.6300 amid trade war fears
AUD/USD stays defensive below 0.6300 in Asian trading on Tuesday. Persistent risk-off mood amid geopolitcal and global trade war fears act as a headwind for the Aussie, offsetting broad US Dollar weakness-led by US economic growth concerns and dovish Fed expectations. US-Ukraine Summit eyed.
USD/JPY rebounds to 147.00 even as risk aversion persists
USD/JPY is off a five-month low, bouncing back to near 147.00 after the downward revision to the Japanese Q4 GDP print. However, the risk-off mood continues to underpin the safe-haven Japanese Yen, keeping the bearish pressure intact on the pair amid weaker US Dollar.
Gold finds demand ahead of US-Ukraine Summit
Gold price is licking its wounds below $2,900 early Tuesday, following three consecutive days of sellers’ rejoicing. All eyes now turn to the US economic data releases for fresh trading impetus, with the JOLTS Job Openings data due later on Tuesday, while the key Consumer Price Index (CPI) report will be published on Wednesday.
The crypto market cap dips to $2.44 trillion while Mt. Gox moves 11,833 BTC worth $932 million
The crypto market continued its ongoing downleg as the week started, as its market cap capitalization reached a low of $2.44 trillion on Tuesday, levels not seen since early November.
Gold finds demand ahead of US-Ukraine Summit
Gold price is licking its wounds below $2,900 early Tuesday, following three consecutive days of sellers’ rejoicing. All eyes now turn to the US economic data releases for fresh trading impetus, with the JOLTS Job Openings data due later on Tuesday, while the key Consumer Price Index (CPI) report will be published on Wednesday.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.