The US Dollar Index may be flat, but it is beating the Euro consistently all through January.

That may change after the rate decision from the Federal Reserve, scheduled for Wednesday. Right now, the US Dollar (USD) has the advantage over the Euro (EURO), at 0.9228 against the Euro. That’s up from 0.9047 at the beginning of the month.

The gain is not substantial, but the dollar has kept gaining while the Euro takes a beating. On the US Dollar Index front, though, the dollar is barely moving. Investors are waiting to see what it will do following the interest rate decision. Expectations are that the rates will remain the same, which will allow investors to go ahead and not worry about the dollar on that front.

This is a similar story to what we are seeing from other government banking institutions around the world, as the governments try to combat lengthy rising inflation with a freeze on interest rates.

USD’s Good Year

The dollar has had a good 2024 so far, starting strong and gaining some momentum. That may not last, say some economic experts, partly because of the high inflation rates. No recession is expected this year, and rate cut expectations dramatically decreased in the last few weeks, which means sentiment on the dollar is positive. However, some economists expect the dollar to face opposition later on in the year, probably in the last half.

If there are any cuts in March from the Federal Reserve, that will hinder the dollar and make it harder for it to continue to push against the Euro. If a retreat happens, though, expect it to come on the back half of 2024. General expectations is that the US dollar will perform mostly flat until then, bar any unforeseen circumstances.

The Euro is being held back by economic recession and inflation in the countries of the European Union. It will likely continue to face an uphill battle as these factors will not disappear soon.