On the morning of 17/9, the euro rose by as much as 0.9% against the US dollar, reaching 1.187 USD. This is the highest level since September 2021. The US Dollar Index, which tracks the greenback against six major currencies, fell 0.7% to 96.63, its lowest point since the beginning of July.

The British pound gained 0.5% against the US dollar, reaching 1.366 USD. The Bank of England (BoE) is expected to hold interest rates steady in its meeting this week, following a cut last month.

Meanwhile, the US dollar hit a one-month low against the Japanese yen, trading at 146.3 JPY. The Bank of Japan (BOJ) also has a policy meeting this week and is expected to keep its interest rate at 0.5%.

EUR/USD exchange rate over the past year. Graph: Reuters

EUR/USD exchange rate over the past year. Graph: Reuters

Over the past few months, the US dollar stabilized after a sharp decline earlier in the year. Recently, however, the currency has come under renewed pressure as investors increasingly bet on the likelihood of a Fed rate cut. US President Donald Trump has also repeatedly called on the Fed to do so.

The market is currently anticipating a further 25 basis point (0.25%) rate cut by the Fed in this week's meeting. Recent data suggests a weakening US labor market.

Karl Schamotta, chief market strategist at Corpay, commented, "We expect Fed Chair Jerome Powell to downplay inflation risks and express a clearer desire to support the labor market. This view sets the stage for a series of cuts in the coming months,".

A report released on 15/9 showed US retail sales grew more than expected in August. However, investors remain concerned about US economic growth amid a weakening labor market and rising prices due to import tariffs.

Jonas Goltermann, senior economist at Capital Economics, predicted, "We think the Fed will ease monetary policy gradually. Bond yields and the US dollar could recover somewhat after that,".

Ha Thu (Reuters)