The dollar continues to decline from the highest level in 20 years

On Wednesday, the dollar index continued to retreat from its highest level in 20 years after it had already digested expectations that the Federal Reserve will raise interest rates by half a point later on Wednesday and about 250 basis points by the end of the year.

Currency markets are awaiting the announcement of the US central bank at 1800 GMT and a press conference for its president, Jerome Powell, after witnessing highly volatile transactions in the past few weeks, during which the dollar jumped to a 20-year high against a basket of competing currencies.

Money markets are betting that the US central bank will raise the interest rate to 3.6 percent by the end of 2023 to curb inflation, which has reached its highest level in 40 years. Having already started its rate-raising cycle in March, the bank is expected to raise it by 50 basis points on Wednesday in addition to two other similar increases in the next two meetings.

Those bets raised the dollar index last month by five percent to 103.93, but it has since fallen 0.3 percent from those levels. By 0830 GMT, it was at 103.39, down slightly on Wednesday.

The dollar’s strength had pressured other currencies and pushed the euro last week to a two-decade low near $1.0469. On Wednesday, the euro was trading at $1.0512.