(Reuters) The U.S. dollar rebounded on Thursday, recouping most of the ground lost in the previous session after the Federal Reserve jolted markets by abandoning all plans to raise rates this year, a signal its three-year campaign to normalize policy might be at an end.
“It makes sense for the U.S. dollar to have fallen after the Fed meeting, but similar to what occurred with the euro after the March 7 meeting, the reaction may have been overdone,” said Juan Perez, senior currency trader at Tempus Inc in Washington.
The euro tumbled earlier this month after the European Central Bank postponed the timing of its first post-crisis rate hike to 2020 at the earliest and launched a new round of cheap loans to banks. The common currency has gained nearly 2 percent against the dollar since then.
“The reality is the economy of no country can really handle further increments to borrowing costs, and we may see more scrutiny over cuts than hikes from now on,” said Perez.
Despite the rebound on Thursday, Perez said he expects the dollar to remain pressured for the rest of 2019.