U.S. dollar falls sharply ahead of Fed events

(MENAFN) On Monday, the U.S. dollar experienced a significant decline, notably weakening against the Japanese yen as traders anticipated a dovish tone in the minutes from the Federal Reserve's July meeting and awaited Fed Chairman Jerome Powell's speech scheduled for Jackson Hole later in the week. The upcoming release of the minutes, set for Wednesday, and Powell's address on Friday are expected to heavily influence currency movements this week. In addition to these events, the market is also bracing for inflation data from Canada and Japan, along with Purchasing Managers' Index (PMI) readings from the U.S., Eurozone, and the U.K.

Against the yen, the dollar dropped over 1 percent to 146.01, slipping below the 146 yen mark earlier in the session. Analysts pointed to the broad weakness of the dollar as a major factor behind this sharp decline, compounded by the potential for continued divergence between U.S. and Japanese monetary policies. Meanwhile, the euro was trading at USD1.1043, approaching a high of USD1.10475 reached the previous week, marking its highest level in over seven months. The British pound also saw gains, reaching a one-month high of USD1.2960 before stabilizing at USD1.2957.

The dollar index, which tracks the performance of the U.S. currency against a basket of six major currencies, fell to a seven-month low of 102.11. This decline reflects the broader trend of weakening for the dollar amid evolving expectations for future monetary policy and global economic data releases. 

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