Currency Markets Tense Amid Fed Meeting and Trade Talks

The U.S. dollar index experienced a decline on Wednesday, breaking a four-day surge as investors grew cautious ahead of an upcoming Federal Reserve policy meeting. This downturn follows a strong reaction to a recent U.S.-European Union trade agreement, with the euro facing its first monthly loss since December 2024.

A powerful earthquake near Russia's Kamchatka Peninsula generated a tsunami, prompting the Japanese yen to strengthen against the dollar and triggering evacuation warnings along Japan's east coast. Currency markets remained largely stable, with investors hesitant to make significant moves before crucial economic data releases and central bank meetings in Canada, Japan, and the United States.

U.S. central bank analysts noted that the selloff in U.S. assets began in early April amid potential trade tensions. However, recent trade deals with Japan and the EU have signaled renewed U.S. global engagement, alleviating some investor concerns. Attention now shifts towards the ongoing trade negotiations between China and the U.S. as both parties agreed to extend their tariff truce, following promising discussions in Stockholm.

(With inputs from agencies.)