USD weakened against other major currencies in the European session on Monday as fears of a fallout from Silicon Valley Bank’s collapse prompted investors to reprice their interest-rate-hike bets.
According to the CME FedWatch Tool, markets are now pricing in a 77.5% probability of a 25-basis-point rate rise at the Federal Reserve’s meeting later this month, compared to 59.8% on Friday. In addition, they are seeing a 22.5% chance of no change in the policy rate in March. A week ago, the possibility of such a move was estimated at 0%. Instead, the odds of a more aggressive 50-basis-point rate are now at 0%, sharply down from 40.2% on the last week’s final trading day.
The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, fell 0.30% to 104.27.