Forex Today: US Dollar stabilizes ahead of mid-tier data
Here is what you need to know on Tuesday, November 25:

Here is what you need to know on Tuesday, November 25:

The trading action in foreign exchange markets remains choppy early Tuesday as market focus shifts to the upcoming macroeconomic data releases from the US, including September Retail Sales and Producer Price Index, November Consumer Confidence, as well as the weekly private sector employment report.

The US Dollar (USD) holds steady against its rivals in the European morning. After closing virtually unchanged on Monday, the USD Index continues to move sideways above 100.00. While the risk-positive market atmosphere and growing expectations for a Federal Reserve (Fed) rate cut in December make it difficult for the USD to gather strength, investors refrain from betting on a steady decline, while waiting for the data backlog to clear. In the meantime, US stock index futures lose about 0.1% in the European morning after Wall Street's main indexes, led by the Nasdaq Composite's 2.6% rally, registered strong gains on Monday.

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the New Zealand Dollar.

USD EUR GBP JPY CAD AUD NZD CHF
USD -0.04% 0.00% 0.08% 0.16% 0.12% 0.35% 0.08%
EUR 0.04% 0.02% 0.11% 0.19% 0.13% 0.37% 0.11%
GBP -0.00% -0.02% 0.06% 0.16% 0.09% 0.35% 0.08%
JPY -0.08% -0.11% -0.06% 0.08% -0.02% 0.14% 0.00%
CAD -0.16% -0.19% -0.16% -0.08% -0.04% 0.20% -0.08%
AUD -0.12% -0.13% -0.09% 0.02% 0.04% 0.25% -0.02%
NZD -0.35% -0.37% -0.35% -0.14% -0.20% -0.25% -0.26%
CHF -0.08% -0.11% -0.08% -0.00% 0.08% 0.02% 0.26%

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).

Gold gathered bullish momentum on dovish Fed commentary late Monday and closed above $4,100, rising more than 1.5% on the day. XAU/USD stays in a consolidation phase, slightly below $4,150 in the European session.

NZD/USD stays under modest bearish pressure and trades in negative territory at around 0.5600. In the early trading hours of the Asian session on Wednesday, the Reserve Bank of New Zealand (RBNZ) will announce monetary policy decisions. Markets expect the RBNZ to lower the interest rate by 25 basis points (bps) to 2.25%.

EUR/USD struggles to find direction and extends its sideways grind above 1.1500 after ending the first day of the week unchanged. The European Central Bank (ECB) will publish the EU Financial Stability Review on Wednesday.

GBP/USD remains stuck in a tight channel at around 1.3100 for the second consecutive day on Tuesday. Investors eagerly await the Autumn Budget presentation on Wednesday.

USD/JPY registered marginal gains on Monday but failed to gather bullish momentum. The pair stays in the red, below 157.00 early Tuesday.

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.

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Name / Symbol
Chart
% Change / Price
GBPUSD
1 D change
+0%
0
EURUSD
1 D change
+0%
0
USDJPY
1 D change
+0%
0

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