Why Is The Dollar Down Over Concerns The Fed Will Pull Back On QE?

Wouldn’t pulling back on Quantitative Easing be Bullish for the Dollar? Why is the Market reacting negatively to the news?

Perhaps the Market thinks a pulling back of QE would be disastrous for the US Economy?

I would like to here from more experienced traders on this subject.

My long position on the USD/JPY pair that I’m trading is taking a beating. I bought in at 97.30 assuming this would be a support however USD/JPY continued to drop to 96.97. I’m still holding and it has rebounded to 97.29. I plan to hold it until it rebounds. I have a stop loss set at 96.6 but don’t think it will be triggered.

Investing.com - The dollar was broadly lower against the other major currencies on Tuesday as concerns over Federal Reserve plans to pull back stimulus measures weighed.

During European morning trade, the dollar was down against the yen, with USD/JPY losing 0.32% to trade at 97.23.

The traditional safe haven yen was boosted as expectations that the Fed may start to unwind its USD85 billion-a-month asset purchase program as soon as next month sparked weakness in Japanese equities markets overnight.

Investors were looking ahead to the minutes of the Fed’s July meeting, due out on Wednesday, for further indications as to when the central bank may start to unwind its bond buying program. Fed Chairman Ben Bernanke has said that the decision to start tapering will depend on whether economic data is strong enough.

Elsewhere, the dollar was lower against the euro, with EUR/USD advancing 0.28% to 1.3372.

The euro showed little reaction after official data on Tuesday showed that German producer price inflation dipped 0.1% in July from a month earlier and was 0.5% higher on a year-over-year basis.

Economists had forecast a 0.2% month-over-month increase and a 0.7% annual gain.

The dollar fell to two-month lows against the pound, with GBP/USD rising 0.12% to 1.5668.

The dollar moved lower against the Swiss franc, with USD/CHF shedding 0.43% to trade at 0.9202.

In contrast, the greenback was broadly higher against its Australian, New Zealand and Canadian counterparts, with AUD/USD falling 0.60% to 0.9058, NZD/USD dropping 0.93% to 0.7992 and USD/CAD easing up 0.12% to 1.0358.

The Australian dollar weakened after the minutes of the Reserve Bank of Australia’s August meeting indicated that further rate cuts remain possible in the future.

Meanwhile, the New Zealand dollar fell after Reserve Bank of New Zealand Governor Graeme Wheeler called the currency “overvalued”.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.22% to 81.10.

Dollar broadly lower amid Fed tapering uncertainty By Investing.com