Global Currencies in Flux Amid Fed Projections and Trade Tensions

The U.S. dollar steadied above a five-month low as the market awaits Federal Reserve projections amid global trade tensions. President Trump’s tariff policies have weakened the dollar. Both the euro and yen saw fluctuations due to international trade conditions and central bank meetings.

The U.S. dollar steadied above a five-month trough against major peers on Tuesday as investors awaited the latest economic projections from the Federal Reserve amidst concerns about the impact of intensifying global trade tensions. The euro, meanwhile, held below its recent peak amid Germany's stimulus vote, while the yen retracted some gains.

U.S. President Donald Trump's aggressive tariff policies have created uncertainties, weakening the greenback due to negative sentiment from recent surveys. This week, the Federal Reserve, along with the Bank of Japan and Bank of England, is expected to maintain current interest rates, with their forward guidance in sharp focus for market participants.

Amidst these developments, the U.S. central bank is set to release new economic projections, potentially highlighting the effects of Trump's policies. While inflation expectations are up, sentiment remains low, complicating the Fed's outlook. Market speculations suggest potential rate cuts, although some anticipate the bank might adopt a more cautious stance.

(With inputs from agencies.)