Forex Today: US Dollar consolidates losses, markets await comments from Fed officials – FXStreet

February 17, 2025

Here's what you need to know on Monday, February 17th:

The major currency pairs trade near the closure level of the previous Monday, as trading terms remain thin, and US financial markets remain closed in compliance with President's Day holidays. The economic calendar does not provide a release of high-rise data, but investors will pay close attention to comments from Federal Reserve officials later in the day.

US Dollar Prices over the past 7 days

The table below shows the rate of change in the US dollar (USD) over the listed major currencies over the past seven days. The US dollar was the weakest against the British pound.

	USD	EUR	GBP	JPY	CAD	aud	NZD	CHF
USD		-1.50%	-1.55%	0.38%	-0.74%	-1.38%	-1.24%	-1.00%
EUR	1.50%		0.02%	2.02%	0.89%	0.12%	0.35%	0.60%
GBP	1.55%	-0.02%		1.84%	0.84%	0.10%	0.29%	0.56%
JPY	-0.38%	-2.02%	-1.84%		-1.16%	-1.69%	-1.63%	-1.37%
CAD	0.74%	-0.89%	-0.84%	1.16%		-0.62%	-0.54%	-0.30%
aud	1.38%	-0.12%	-0.10%	1.69%	0.62%		0.23%	0.47%
NZD	1.24%	-0.35%	-0.29%	1.63%	0.54%	-0.23%		0.24%
CHF	1.00%	-0.60%	-0.56%	1.37%	0.30%	-0.47%	-0.24%

The heatmap shows the rate of change of each other's major currencies. The base currency is selected from the left column, and the estimated currency is selected from the top row. For example, if you select US dollars from the left column and move along the horizon to Japanese Yen, the rate of change shown in the box represents USD (base)/JPY (QUOTE).

Data released by the U.S. Census Bureau announced on Friday that monthly sales in January fell 0.9% per month, worsening the market's expectations for a 0.1% decline. USD (USD) Index struggled to gain traction towards the weekend and lost more than 1% each week. On Monday's European morning, the USD index remains roughly the same for the day, just below 107.00.

During Asian trading hours on Monday, data from Japan showed industrial production contracted 0.2% in December, following a 0.3% growth recorded in November. Meanwhile, Japan's top minister Yoshimasa Hayashi said that when companies become the target of US President Donald Trump's policies, Japan faces major challenges. He added that the government will respond carefully to potential impacts. USD/jpy Stay under modest bear pressure to start a new week and trade below 152.00.

EUR/USD It benefited from widespread sales pressure surrounding USD last week and a rise of over 1.5%. The pair moves sideways in a narrow area of less than 1.0500 on Monday European mornings.

GBP/USD It reached its most powerful level from December 19th at 1.2630 on Friday, but erased some of its daily profits later in the day. Nevertheless, the pair rose 1.5% and closed for two consecutive weeks in positive territory. In early European sessions, GBP/USD remains quiet at around 1.2600.

The Reserve Bank of Australia (RBA) will announce its monetary policy decisions at its early Asian session on Tuesday. Investors expect the RBA to cut its policy rate by 4.35% to 4.1% to 25 basis points (BPS). aud/usd It will hold the ground early on Monday and trade at the highest level above 0.6350 from mid-December.

gold It fell sharply on Friday, losing more than 1.5% in a day. Xau/USD regained its traction on Monday, trading modestly on a day that is nearly $2,890.

US Dollar FAQ

The US dollar (USD) is the official currency of the United States and is “effectively” currency in a considerable number of other countries in circulation along with local notes. According to data from 2022, it is the most frequently traded currency in the world, accounting for more than 88% of global forex sales, or an average of $6.6 trillion per day. After World War II, the US dollar took over from the British pound as the world's reserve currency. For much of its history, the US dollar was supported by gold, but in 1971 there was the Bretton Woods Agreement, which lost its gold standard.

The most important single factor affecting the value of the US dollar is monetary policy shaped by the Federal Reserve. The Fed has two tasks: achieving price stability (control inflation) and promoting full employment. The main tool to achieve these two goals is adjusting interest rates. When prices rise rapidly and inflation exceeds the Fed's 2% target, the Fed will raise interest rates and help the USD value. If inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which is heavier on the greenback.

In extreme circumstances, the Federal Reserve could also print more dollars and enact quantitative easing (QE). QE is a process that dramatically increases the credit flow in the financial system where the Fed has been stuck. This is a non-standard policy measure used when credits run out (due to the fear of counterparty defaults) as banks are not lending to each other. If you're not likely to achieve the desired outcome simply by lowering your interest rates, this is a last resort. Fed combating the credit crunch that occurred during the 2008 financial crisis was a weapon of choice for the Fed. It involves printing Fed prints in more dollars and using them to buy US government bonds primarily from financial institutions. QE usually weakens the US dollar.

Quantitative tightening (QT) is the reverse process in which the Federal Reserve stops purchasing bonds from financial institutions and does not reinvest principal from mature bonds with new purchases. It's usually positive for the US dollar.