The dollar came under renewed selling pressure this morning, sliding lower against a basket of major currencies ahead of the Federal Reserve’s policy decision.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.24%.
The dollar has come under pressure as it has lost its relative yield attraction for investors. A faster rate of monetary tightening outside the U.S. would lessen the divergence between the Federal Reserve and other central banks.
The dollar showed a limited reaction to U.S. President Donald Trump’s State of the Union speech, in which he urged Congress to pass legislation to stimulate at least $1.5 trillion in new infrastructure spending.
Investors remained cautious ahead of a slate of events this week, including the Fed’s two-day policy meeting that ends later today and Friday’s U.S. employment report for January.
Sterling rose on after Bank of England Governor Mark Carney said the central bank was turning its focus back to bringing down inflation, supporting investors betting that the central bank would rein in monetary policy faster than expected.