Dollar Gains Amid Trade Agreement Hopes and Fed Anticipation

The dollar climbed against European currencies, notably the pound, buoyed by optimism over a potential U.S.-China trade truce. U.S. President Donald Trump hinted at reducing tariffs on Chinese goods after meeting with South Korean President Lee Jae Myung, aiming for commitments from Beijing on curbing fentanyl exports.

Anticipation builds as Trump prepares for a significant summit with China’s Xi Jinping, while market attention is also fixed on the Federal Reserve's meeting. Bart Wakabayashi, Tokyo branch manager at State Street, noted a potential dollar rebound following an extended sell-off. The euro fell to $1.1636, snapping a five-day gain streak, as the dollar rose against other safe-haven currencies like the Swiss franc.

Asian currencies, including Korea's won and China's yuan, also strengthened. Meanwhile, the Federal Reserve's upcoming interest rate decision remains in focus, with traders predicting a rate cut due to concerns about the weakening U.S. jobs market. ECB and BOJ are set to hold rates steady, impacting currencies like the yen. Observers await key results from upcoming central bank meetings in Britain and Australia.