Dollar Price Forecast: Dollar Retreats as ECB and BoE Hold Policy Steady; EUR/USD and GBP/USD Rally

The U.S. dollar eased after the Federal Reserve kept interest rates unchanged, following a decision that included three dissenting votes favoring a hike. With other central banks adopting a more inflation-monitoring approach rather than a consistently hawkish stance, the greenback’s safe-haven support from Middle East tensions was not enough to prevent weakness. The euro gained as investors reacted positively to dollar softness, though underlying financial conditions remained negative. In the eurozone, the European Central Bank also held rates steady after its June increase, leaving the deposit facility at 2.25%, while eurozone growth has stagnated. The inflation differential over the year had favored the U.S., but expectations that eurozone officials will act helped the euro.