The dollar was on the defensive on Tuesday on expectations that the Federal Reserve will keep its easy policy stance and on sharpened appetite for risk following Beijing’s announcement of sweeping reforms.
But optimistic comments on the U.S. economy by Fed officials slightly dented the prevailing expectations on Fed policy, limiting losses for the dollar.
The dollar index stood at 80.664, not far from Monday’s low of 80.565. A break above Monday’s high of 80.923 is needed to halt its downtrend in the past week. The dollar has been under pressure from expectations that Janet Yellen, the Federal Reserve’s chief in waiting, is likely to pursue an accommodative policy to support job growth.
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