0927 GMT January 23, 2018
Trading was thin because participants in many countries were away for public holidays. Some profit-taking on the dollar’s recent surge weighed on the US currency, according to Market Watch.
Market participants are now reluctant to keep buying the dollar after having lifted it since the US presidential election in early November. The ascent was driven by speculation that incoming president Donald Trump will boost fiscal spending and introduce tax cuts, including possibly tax relief for US companies repatriating earnings held overseas.
Market participants are now watching to see if Trump would indeed take steps to improve the US economy.
“If he can works well with Congress, more dollar-buying is likely,” said Akira Moroga, joint general manager of market products division at Aozora Bank. If that happens, the euro could test parity against the dollar next year, he said.
Meanwhile, market participants are also watching if Trump expresses any concerns about the dollar’s recent strengthening, which could damage the competitiveness of US-based manufacturers in global markets.
The dollar has strengthened 3.7 percent against the euro so far this year. The US currency has gained 7.0 percent against the Chinese yuan in 2016, though the dollar is still down 2.6 percent against the yen.