USD awaiting Fed, Bitcoin is at the highest level in two years

On Monday, the US dollar traded within a narrow range, facing pressure from declining Treasury bond yields as investors awaited key economic data for clues on the Federal Reserve’s potential interest rate cuts.

Bitcoin surged to its highest levels in over two years, buoyed by significant inflows into cryptocurrency funds traded on exchanges.

The euro demonstrated strength following a 0.33 percent increase on Friday, with investors anticipating a monetary policy decision from the European Central Bank later in the week.

The yen’s performance hovered around 150 against the dollar, a critical level being closely monitored by traders amid speculation over the Bank of Japan’s potential policy adjustments.

The dollar index, measuring the greenback against six major currencies, remained largely unchanged, trading at 103.85 by 0530 GMT, after a 0.26 percent decline on Friday driven by weak data on manufacturing and construction spending.

Treasury bond yields also felt the impact, with the yield on 10-year bonds dipping to a two-week low of 4.178 percent before rebounding to around 4.2 percent on Monday.

Investors await the release of the ISM manufacturing and services index readings on Tuesday, followed by monthly employment data later in the week.

The dollar edged up 0.1 percent against the yen to 150.28 as traders weighed cautious comments from Bank of Japan Governor Kazuo Ueda, who suggested it was premature to conclude that the central bank’s inflation target was nearing achievement.

Meanwhile, the euro held steady near $1.08435, with most economists anticipating the ECB to cut interest rates in June, though additional clarity may emerge from ECB President Christine Lagarde’s upcoming press conference.

The British pound saw a modest increase of 0.08 percent to $1.2663.

Bitcoin’s recent rally continued, gaining approximately 1.2 percent from Sunday to reach $63,350, marking its strongest performance since November 2021. The cryptocurrency has surged by 50 percent this year, largely driven by increased trading volume in Bitcoin funds listed in the US following their approval earlier in the year.