The dollar extended losses today, a day after the Federal Reserve delivered what some expect to be its last rate hike, while the market's focus shifted across the Atlantic to the European Central Bank's impending rate announcement.
The Fed on Wednesday raised interest rates by a quarter of a percentage point, as expected, marking its 11th rate increase in its last 12 meetings.
While Fed Chair Jerome Powell left the door open to another hike in September, traders appeared unconvinced and the dollar extended Wednesday's modest post-meeting 0.3% drop.
The market considers that it is likely the series of rate hikes we've had are over now.
The ECB comes under the spotlight next, with investors expecting the central bank to similarly raise rates by 25 basis points (bps) at the conclusion of its monetary policy meeting on Thursday, with the focus on its forward guidance and expectations for September.
The market has been positioned for the ECB to hike in September. If the probability of a September move is even slightly diminished relative to what the market had been expecting, the euro could drop further.