The U.S. dollar rose as it eyed the FED’s policy statement

The U.S. dollar increased on April 28 as it eyed the U.S. Federal Reserve’s policy statement. Furthermore, the dollar was supported by a speech by U.S. President Joe Biden, seeking to extend a recovery after a one-month decline.

The U.S. dollar index stood at 91.004, recovering from Monday’s low of 90.679, its lowest level unseen since March 3. However, investors were not convinced a recent decline had ended.

According to Westpac strategists, the backdrop for the dollar index is not attractive. They predict the gauge will fall toward 90 this week.

On April 28, the U.S. central bank is widely expected to keep its policy settings. Fed Chairman Jerome Powell is likely to repeat his dovish message.

Moreover, investors’ inflation expectations, measured by the BEI rate calculated from U.S. inflation-linked bonds, surged above 2.40% on Tuesday, the highest level unseen since 2013.

The Federal Reserve announced in 2020 that it intends to bring average inflation to about 2% and allow it to overshoot over 2%.

The euro dipped by 0.2% and settled at $1.2073, off Monday’s two-month high of $1.2117.

The U.S. dollar traded at 108.855 yen, having increased 0.59% overnight and extending its rebound from a seven-week low of 107.48 reached last week. Meanwhile, U.S. bond yields also boosted.

The yen was on the back foot as Japan’s economic recovery suffered setbacks from recent surges in coronavirus infection. Moreover, the Bank of Japan acknowledged that inflation will fail to reach its key 2% target through early 2023.

The Japanese yen declined even against low-yielding European currencies, reaching a 2-1/2-year low against the euro, at 131.57 per euro. It stood at a five-year low against the Swiss franc, at 119.08 per franc.

Biden is likely to roll out a plan to increase taxes on the wealthiest Americans

Investors are also looking to Joe Biden’s first address to a joint session of Congress. The address is scheduled later on April 28.

The U.S. President is likely to roll out a plan to increase taxes on the wealthiest Americans, including the rise in levies on investment gains, to fund around $1 trillion in childcare.

Elsewhere, the Australian dollar fell by 0.3% and settled at $0.77415 after the country’s consumer price index came in weaker than anticipated.

Meanwhile, the world’s largest cryptocurrency, Bitcoin, traded as high as $55,809.86, extending its recovery from a 7 1/2-week low of $47,004.20 reached on Sunday.

The second-biggest cryptocurrency, Ether, reached a record high of $2,719.47 on Wednesday before declining by 0.9% at $2,596.40.