The dollar and euro held tight ranges on Wednesday, ahead of a meeting between U.S. President Donald Trump and European Commission President Jean-Claude Juncker as investor focus shifted to the trade rift between the two economic powers.
The dollar index against a basket of major currencies .DXY stood little changed at 94.555, off its two-week low of 94.207 hit on Monday.
Fears of a trade war with the United States kept the euro trapped in narrow ranges as Juncker travels to Washington on Wednesday for trade-focused talks with Trump. The talks come after the U.S. imposed tariffs on EU steel and aluminum and Trump’s threats to extend those measures to European cars.
“If there is a further escalation of the trade issue, that could potentially hurt the risk sentiment and put pressures on the dollar/yen,” said Shinichiro Kadota, senior FX & rates strategist at Barclays.
The euro booked a slight gain after data released on Tuesday showed business growth remained robust, yet below forecasts.
The single currency EUR= was trading 0.1 percent higher at $1.1695.
Against the yen, the dollar was nearly flat at 111.27 yen per dollar JPY=.
The yen has found some support early this week on expectations the Bank of Japan might be a step closer to scaling back some of its aggressive monetary stimulus.
Risk appetite remained mostly firm, supported by strong U.S. corporate earnings and hopes China will boost fiscal support for its economy.
The Australian dollar was 0.1 percent lower at $0.7412 AUD=.
The Aussie gave up early gains of about 0.3 percent, following Beijing’s promise this week to pursue a more “vigorous” fiscal policy.