Dollar Fell From Its Highest Level In 11 Months Awaiting Yellen

by on August 21, 2014 3:36 pm BST

The dollar has strengthened 1.7 percent in the past month. The euro fell 0.4 percent and the yen declined 0.9 percent. The dollar fell from the highest in 11 months versus the euro before Federal Reserve Chair Janet Yellen speaks tomorrow at a meeting of central bankers in Jackson Hole, Wyoming.

Dollar rallied yesterday after minutes of the July Fed meeting showed policy makers raised the possibility they may raise interest rates sooner than anticipated. Norway’s krone gained the most in more than a week after the nation’s economy expanded more in the second quarter than analysts estimated. The pound declined to the lowest level in four months, while China’s yuan dropped the most in two months.

The U.S. dollar slid 0.1 percent to $1.3271 per euro at 9:36 a.m. in New York after appreciating to $1.3242, the strongest level since Sept. 10. The greenback was at 103.71 yen after advancing to 103.96, the highest since April 4. The euro was at 137.64 yen.

Technical indicators show the dollar’s gains may have come too fast. The currency’s 14-day relative-strength index against the yen rose to 77, while the equivalent gauge versus the euro climbed to 75, both above the level of 70 that some traders see as signaling an asset is overbought and may be about to reverse course.

China’s yuan fell 0.16 percent, the most since June 16, to 6.1514 per dollar. The People’s Bank of China cut its daily fixing by 0.08 percent to 6.1632 per dollar today, the most since July 4.

The dollar’s gains may be limited to reaching $1.3150 per euro in the next four weeks.