The dollar is losing ground ahead of the Fed meeting; the euro edges up slightly.

The US dollar is losing ground at the start of Monday’s trading session ahead of the upcoming Fed meeting.

The dollar index, which tracks the performance of this currency against a basket of other six major currencies, is down by 0.1% to 103.035, after rising around 0.5% last week, its first weekly gain in four.

The US dollar has started the new week on a slightly negative note, though it remains near two-week highs, after strong US inflation readings last week put traders on guard for any aggressive stance from the Fed, as the US central bank holds its two-day monetary policy meeting this week, concluding on Wednesday.

Attention on Wednesday will focus on whether Fed policymakers revise their interest rate cut projections for this year.

There are currently three 25 basis point rate cuts projected on the dot plot for 2024, but the projections are so scattered that it would only take two FOMC members to change their minds for the consensus to be at two or four rate cuts this year.

In Europe, the EUR/USD pair is up by 0.1%, reaching the level of 1.0899, after it was confirmed that eurozone consumer prices approached the ECB’s medium-term target of 2% in February.

The final figure for eurozone inflation stood at 2.6% annually in February, down from 2.8% the previous month, as expected, while the annual core figure fell to 3.1% from January’s 3.3%.

Several ECB speakers will appear this week, including President Christine Lagarde on Wednesday, and recent rumors from the central bank tend to point to an interest rate cut in June.

The GBP/USD pair is down by 0.1% to the level of 1.2738, and the Bank of England is expected to keep rates unchanged at its Thursday meeting.

In Asia, the USD/JPY pair is up by 0.1%, reaching the level of 149.22, amid volatility ahead of the upcoming Bank of Japan meeting.

The BoJ’s two-day meeting began on Monday, and a highly anticipated decision will be made on Tuesday.

The USD/JPY pair dropped to 146 points due to speculation that the central bank would end its ultra-loose policy, but traders remained divided on whether the bank would raise rates in March or April, with the general consensus slightly leaning towards a hike in April.

The USD/CNY pair is up by 0.1%, reaching the level of 7.1982, following the release of a series of economic data that provided mixed signals about the Chinese economy.

Although industrial production grew more than expected in the first two months of 2024, retail sales fell short of expectations, and unemployment unexpectedly rose.

The People’s Bank of China will also announce its preferred loan rates this week, although it is expected to keep rates unchanged.