The dollar settled near a two-week high versus its rivals on Wednesday as U.S. President Donald Trump’s State of the Union speech failed to surprise currency traders with markets more focused on the near-term outlook for monetary policy.
Both the U.S. Federal Reserve and the European Central Bank have signaled a cautious monetary outlook in recent days with the Fed’s pause proving a relatively bigger surprise for markets.
As a result, the euro has failed to shake itself out of a broad $1.13-1.15 range it has traded within for the last three months.
That shift in policy thinking was evident in the slump of the Australian dollar after its central bank opened the door to a possible rate cut in a remarkable shift from its long-standing tightening bias.
The Australian dollar plunged 1.5 percent to $0.7133, set for its biggest daily drop in a year, and market analysts rushed to change their interest rate forecasts.
The pound remained on the back foot following a slump overnight. The currency was a shade lower at $1.2930 after brushing $1.2923, its lowest since Jan. 22.