The U.S. dollar rose against the euro on Monday on expectations that the Federal Reserve will take a less-dovish stance on monetary policy at the end of a two-day meeting on Wednesday, while risk aversion on lower oil prices underpinned the yen.
Bets that the Fed would take a less-accommodative stance on monetary policy and remove the phrase “considerable time” in reference to its timeline for raising rates supported the dollar. Analysts said the Fed could do so on signs of improvement in the U.S. economy, including the labor market.
Higher interest rates are expected to boost the dollar by driving investment flows into the United States. The dollar’s gains against a basket of major currencies, including the euro and Swiss franc, did not carry over to the Japanese yen, which rose against the greenback despite Japan’s Prime Minister Shinzo Abe and his ruling coalition securing an election win on Sunday.
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