The U.S. dollar pulled back from its early highs against its most major counterparts in the European session on Wednesday, as European shares rose amid a slew of corporate earnings results and on hopes of loose monetary policies to help the economy.
Investors await the European Central Bank’s monetary policy announcement on Thursday, which is expected to adjust its forward guidance, reflecting the new 2 percent inflation goal adopted by the bank earlier this month.
The ECB is expected to leave its key rates and the pandemic emergency purchase programme unchanged when it concludes its rate-setting meeting on Thursday.
The policy statement will incorporate its recently adopted symmetric inflation target of 2 percent in the medium term, instead of its previous goal of “below, but close to, two per cent.”
In another development, U.S. Senate Majority Leader Chuck Schumer announced a procedural vote on the infrastructure spending bill later in the day despite opposition from Republicans.
But Republican Senator Mitt Romney said that Republicans are planning to block the vote even though they support the broad infrastructure bill.
Growing concerns about the spread of the Delta variant of the coronavirus underpinned the safe-haven currency earlier in the session.
While South Korea and Thailand reported record daily infections, Australia, Japan and the U.K. saw flare up in new cases.
The greenback retreated to 0.9207 against the franc, 1.3639 against the pound and 1.1782 against the euro, off its early highs of 0.9231 and 1.3591 and a 3-1/2-month high of 1.1782, respectively. The greenback is likely to face support around 0.90 against the franc, 1.38 against the pound and 1.20 against the euro.
The greenback eased off to 0.6931 against the kiwi and 0.7321 against the aussie, from its prior high of 0.6894 and an 8-month high of 0.7289, respectively. The next likely support for the greenback is seen around 0.70 against the kiwi and 0.75 against the aussie.
The greenback fell to a 2-day low of 1.2670 against the loonie, from a high of 1.2730 seen at 2 am ET. The greenback is seen finding support around the 1.25 level.
In contrast, the greenback climbed to a 5-day high of 110.18 against the yen from Tuesday’s close of 109.85. If the dollar rises further, 112 is likely seen as its next resistance level.
Looking ahead, Canada new housing price index for June is scheduled for release in the New York session.