At the start of a new week, the greenback is trading under a mild selling pressure after a steep decline on Friday. The American currency feels uncomfortable after the Fed officials expressed concerns about global growth. Investors took the recent comments as a signal that the central bank could slow down the process of monetary policy normalization, which discouraged dollar bulls.
Against this backdrop, the December rate hike expectations have declined from over 90% to just 73%, while the 2019 rate hike outlook has shifted as well. So far, the reemerged trade war fears cap the buck’s downside potential, but should the Federal Reserve officials confirm their softer stance on policy tightening due to global risks, the trade factor won’t be able to support the USD as its safe-haven status could weaken.
In this context, traders will closely follow comments by New York Fed President John Williams later today. As Williams is considered a centriston monetary policy, his statement could both support and pressure the buck, depending on his position.
In a wider picture, the dollar trading ranges could narrow this week due to a Thanksgiving day effect in FX markets, followed by Black Friday. Amid the heightened uncertainty over the Fed’s position, the path of least resistance for the dollar is on the downside.