The Dollar Index is Losing The Bullish Momentum

The dollar index settled near 98.4 during trading on Wednesday, after it failed to achieve sharp daily gains in the previous session, as investors weighed up optimistic statements from Federal Reserve officials in exchange for improved risk appetite that sent global stocks higher.

The dollar jumped last Monday after Federal Reserve Chairman Jerome Powell opened the door to raise interest rates by more than 25 basis points at upcoming policy meetings in order to combat inflation.

The Fed also raised its benchmark lending rate by a quarter-point at its meeting last week, the first increase since December 2018, and indicated six more increases of that size this year.

This presents a stark contrast to the stance of the BoJ, which maintains a very loose monetary policy lest inflation hurt the economy. Bank of Japan Governor Haruhiko Kuroda said on Tuesday that Tokyo should maintain its highly stimulus monetary policy as its economy is still in the very early stages of recovery.