There’s growing certainty that the Federal Reserve Bank is likely to boost interest rates within the next quarter. Given that probability, the Dollar had continued on its upward trajectory until it finally steadied earlier today against the Euro, just off of a 3-month high. Recent improved economic data alongside the Fed’s own hawkish rhetoric had helped to provide a mini rally for the greenback though it seems that that has now subsided.

As reported at 10:46 am (BST) in London, the EUR/USD was trading at $1.1221, a gain of 0.04%; the pair ranged from a session low of $1.1205 to a peak of $1.1235. Meanwhile the USD/JPY was down 0.22% at 109.9340 Yen. The AUD/USD was 0.19% lower at $0.7209 and the NZD/USD was up 0.33% at $0.6760.

Dollar’s Broad Rise Questioned

Analysts caution FX traders, however, noting that in an election year, politics could still play a role in the Dollar’s direction. In fact, it appears that traders are playing it carefully with the latest indicators showing that some players don’t believe the Dollar’s strength to be broad-based. One currency strategist in Paris said that it will be very important for traders to take into account the growing likelihood that other central banks will intentionally try to weaken their currency, citing specifically the Japanese Yen and the Chinese Yuan. That particular topic is likely to be a hot-button one at the upcoming G7 meeting in Japan.