The US dollar pulled back today as the market sentiment improved, reducing the need for safety provided by the currency, and traders started to take profit from their long positions.
The greenback also fell due to the market sentiment that has been improving after Greece reached a deal with its European creditors. The dollar’s drop benefited commodities, priced in the US currency, and commodity currencies as a result.
The near-term outlook for the greenback remains bullish on prospects for monetary tightening later this year. Yesterday, St. Louis Fed president James Bullard talked about the possibility of an interest rate hike in September.
The Federal Reserve will conduct its July policy meeting next week. While a rate lift-off during the meeting is highly unlikely, the policy statement may provide useful insights into thoughts and plans of US policy makers.
EUR/USD jumped 1.1 percent from 1.0824 to 1.0941 and USD/JPY dropped from 124.17 to 123.91 as of 18:52 GMT today. GBP/USD was basically flat at 1.5556.
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