Article Highlights

  • Euro slips back after hitting 2-1/2 year high overnight
  • Dollar index pulls up from 15-month lows
  • Sterling steady ahead of Bank of England rate decision
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The dollar inched away from a 15-month low versus a basket of currencies on Thursday, but was still looking wobbly due to doubts about whether there will be another U.S. interest rate rise this year.

The dollar index, which measures the greenback’s value against a basket of six major currencies, rose about 0.1 percent to 92.949. On Wednesday, it slid to 92.548, its weakest level since May 2016.

The greenback has been weighed down by political turmoil gripping Washington and by largely uninspiring U.S. economic data, particularly sluggish inflation, which is adding to uncertainty about the pace of future Federal Reserve policy tightening.

The euro crept 0.1 percent lower to $1.1845, backing away from a 2-1/2 year high of $1.19105 set on Wednesday — the common currency’s highest level since January 2015.

In contrast to the political risks and monetary policy uncertainty that have plagued the dollar, the euro has drawn support from expectations that the European Central Bank would eventually begin phasing out its easy policy.

The euro appears headed for a test of the $1.20 level, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

At the same time, however, the recent build-up of euro bullish bets points to the risk of a pull-back.

“The balloon has been swelling,” Okagawa said, referring to long positions in the euro.

Against the yen, the euro slipped 0.1 percent to 131.19 , trading within sight of Wednesday’s high of 131.40 yen, the euro’s strongest level against the yen since February 2016.

The dollar held steady against the yen at 110.76, having pulled away from a low of 109.92 yen set earlier this week, the greenback’s lowest level in more than six weeks.

Sterling held steady ahead of the Bank of England’s (BoE) interest rate decision due later on Thursday.

The pound last changed hands at $1.3217. On Wednesday, it rose to $1.3250, its highest level in nearly 11 months.

The BoE looks set to keep interest rates at a record low once again on Thursday with investors looking for signs that, faced with Brexit, it is getting nearer to raising rates for the first time in a decade.