Greenback Gains Amid Trade War Talks and Federal Reserve Speculations

The U.S. dollar strengthened against the yen and Swiss franc, while remaining stable against the euro, as investors focused on the Federal Reserve meeting and trade negotiations. Treasury Secretary Scott Bessent's testimony and U.S.-China talks in Switzerland may indicate potential resolutions to the ongoing trade war.

The U.S. dollar gained strength against the yen and Swiss franc amid market expectations surrounding the Federal Reserve's policy meeting and ongoing U.S. tariff negotiations. On Tuesday, a successful 10-year U.S. Treasury auction indicated sustained demand for U.S. assets despite trade-related uncertainties.

After an initial drop due to tariff announcements, the greenback rebounded following U.S. Treasury Secretary Scott Bessent's comments hinting at a possible de-escalation in U.S.-China trade tensions. Bessent and chief negotiator Jamieson Greer are set to meet with China's He Lifeng in Switzerland for pivotal talks addressing the trade war's global economic impact.

With interest rates expected to remain unchanged, investors look for Federal Reserve signals on economic outlooks amid tariff uncertainties. Experts like Thierry Wizman note the challenge of predicting tariffs' inflationary impacts, emphasizing the importance of the FOMC's cautious communication on future rate adjustments.

(With inputs from agencies.)