The US dollar lost ground against major currencies on Monday as global investors shifted focus to the upcoming Federal Open Market Committee (FOMC) meeting set for Wednesday.
Market sentiment tilted cautious, with risk appetite softening across the board. The S&P 500 futures dipped 0.7%, mirroring broader unease and contributing to the dollar’s overall decline in forex trading.
According to the CME FedWatch tool, markets are heavily leaning toward a pause in interest rate adjustments, with a 96.9% probability that the Fed will maintain its target rate at 4.25% - 4.50%, and only a 3.1% chance of a rate cut to 4.00% - 4.25%.
Currency movements reflected this mood:
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EURUSD climbed to 1.1340, up from 1.1300 at Friday’s US close and 1.1326 earlier that day. Despite a slight uptick in Eurozone investor confidence for May, sentiment remains broadly pessimistic. The European Central Bank is scheduled to meet June 4–5.
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GBPUSD rose to 1.3317 from 1.3274 at the Friday close and 1.3295 Friday morning. UK markets were closed for a public holiday, leaving no economic data on Monday. The Bank of England is expected to cut rates by 25 basis points at its Thursday meeting.
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USDJPY weakened to 143.8021 from 145.0191 on Friday and 144.4982 earlier that day. With Japan observing a national holiday, no new data were released. The Bank of Japan’s next policy meeting is set for June 16–17.
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USDCAD edged down to 1.3794 from 1.3810 at Friday’s close and 1.3820 in early Friday trade. Markets await Canadian reserve asset data for April, while the Bank of Canada will meet on June 4.
Investors now await midweek policy signals from the Fed, which could shape near-term currency trajectories and broader financial market sentiment.
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